The URL can be used to link to this page

Home My WebLink About11 Mid-Year Financial Update 2021 AGENDA ITEM #11 Page 1 of 4 MEETING DATE: August 18, 2021 TO: Board of Directors FROM: Michael Salmon, Chief Financial Officer SUBJECT: Mid-Year Financial Update - 2021 APPROVED BY______________________________ Brian C. Wright, General Manager RECOMMENDATION: Accept and file the 2021 mid-year financial update. DISCUSSION District Code requires a semi-annual review of the budgeted revenues and expenditures as compared to the year-to-date actual revenues and expenditures. The included and referenced herein budget to actual reports are a consolidated report of actual activity for revenues, operating expenses, capital expenditures, debt service, and transfers. The report is a non-GAAP sources and uses style report and excludes depreciation, amortization and contributed capital activities. General Comments: During the Covid-19 pandemic, the District has seen a slight increase in demand for electric and water services; attributed primarily to an increase in usage of 2nd homes. The District has experienced an increase in non-payment for services provided, driven in large part by the economic impacts of the COVID pandemic, which amounts to $213,000 in 90+day delinquent receivables as of June 30, 2021, as compared to $111,000 as of December 31, 2020 and $44,000 as of June 30, 2020 respectively. The District’s customer relief program for residential customers has assisted 355 customers with in total $110,000 in account credit aid. A California Arrearage Payment Program (CAPP) administered by the California Department of Community Services and Development is active and federally funded with $1B in electric/natural gas utility relief funds. The CAPP program is actively seeking utility arrearage information and other details. The CAPP relief funding to be provided to each utility is yet to be determined. A similar program for water utilities is currently in legislative discussions. Electric Utility (Attachment 1): Page 2 of 4 Operating Revenues Year to Date (YTD) 6/30/2021 of $15.36M are 55% of annual budget which equates to favorable $1.52M. Electric residential sales are up 9% to budget and commercial sales are up 2% to budget. Miscellaneous revenues are under budget due to current pandemic pause on late fees/interest charges. Annual forecast is favorable $1.09M or 4% to budget in operating revenues, driven by demand/usage increase. Operating Expenses cost YTD 6/30/2021 of $11.25M are 50% of annual budget which equates to a favorable $1,329. Electric operations at 58% of annual budget is pacing over budget due to wildfire mitigation costs, with annual forecast to be $500,000 over Budget due to Board approved increases in funding for these efforts. The Board is running $20,000 over budget YTD primarily due to consulting services not budgeted in 2021. Conservation is under budget due to staffing vacancies and pandemic impacts. All other departments are running at or near budget pace. Annual forecast for Operating Expenses is $11.42M, unfavorable $168,000 or 1% to budget. Purchased Power cost YTD 6/30/2021 of $6.64M are 51% of annual budget which equates to an unfavorable $187,000. This is driven primarily by an increase in demand/usage. Annual forecast is of $13.10M is unfavorable $185,000 or 1% to budget in purchased power driven by demand/usage increase. Capital Expenditures YTD 6/30/2021 of $1.03M are 16% of annual budget, under-running due primarily to timing of projects for the year and between years. Annual forecast is $4.91M, under budget $1.59M in expenditures for the year, due to certain projects deferred to future years. The Truckee Substation rebuild (facility fees project) was budgeted for in 2020 and is being constructed in 2021. The deferrals due to resources (time mainly) to properly plan and execute projects, which includes $1.22M electric operations building budget in 2021. Other cash flow items: Investment income is significantly under budget YTD and forecasted to be unfavorable to budget $339,000 or 87%. Interest rates at LAIF and other pooled investment funds have fallen to approximately 0.22% in July and August. The Board recently authorized up to $10M (E&W combined) in additional investment instruments, which are currently yielding approximately 0.5%. Debt service for Electric of $643,000 for Pension Obligation Bonds (side fund) payments are on schedule/budget. Transfers In/Out has a budget of $3.24M and is forecasted to be $2.66M or $583,000 less than budget; adjusting for: a) additional Truckee Substation facility fees use (timing) of $898,000; b) less $1,773,000 of capital reserve use budget but not expended in 2021; and c) use of vehicle reserve funds transfer in $292,000 more (timing between years). Electric Utility’s Net Budget Activity YTD 6/30/2021 is positive $3.40M and Forecast 2021 is a positive $1.41M. Water Utility (Attachment 2): Page 3 of 4 Operating Revenues Year to Date (YTD) 6/30/2021 of $7.14M are 50% of annual budget which equates to favorable $38,000. Water residential sales are up 2% to budget and commercial sales are down 9% to budget. Miscellaneous revenues are under budget due to current pandemic pause on late fees/interest charges. Annual forecast operating revenues of $14.97M are favorable $762,000 or 5% to budget, driven primarily to rates increase of 8.9% average compared to budget expectation of 3.0% and peak summer months revenues (Q3/2 nd Half) exceeding straight-line budget. The 2021 approved rate increase was greater than budget primarily in order to help fund the Water Utility’s 10-year capital improvement plan which addresses the aging water utility infrastructure. Operating Expenses cost YTD 6/30/2021 of $4.45M are 45% of annual budget which equates to a favorable $448,000. Water operations at 45% of annual budget is pacing under budget primarily due to timing between months, with annual forecast to be $92,000 or 2% under Budget. Board is running $20,000 over budget YTD primarily due to consulting services not budgeted in 2021. Conservation is under budget due to staffing vacancies and pandemic impacts. All other departments are running at or near budget pace. Annual forecast for Operating Expenses is $9.53M, favorable $268,000 or 3% to budget. Capital Expenditures YTD 6/30/2021 of $824,000 are 41% of annual budget, under-running due primarily to timing of projects for the year and between years. Annual forecast is $3.10M, is over adopted annual budget $1.09M in expenditures for the year, due primarily to $1.24m pipeline replacement project approved (4/7/20201) but not in adopted budget for 2021; with project funded via rates increase greater than budget. Other cash flow items: Investment income is significantly under budget YTD and forecasted to be unfavorable to budget $73,000 or 71%. Interest rates at LAIF and other pooled investment funds have fallen to approximately at 0.22% in July and August. The Board recently authorized up to $10M (E&W combined) in additional investment instruments, which are currently yielding approximately 0.5%. Debt service for Water budget is $3.09M while the Forecast for year is $6.49M. The additional $3.4M in forecast reflects the early payoff in full (in July 2021) of the SRF Loan scheduled through 2026, a NPV savings of $160,000 in interest expense. Transfers In/Out has a budget of $583,000 and is forecasted to be $4.121M or $3.538M more than budget; adjusting for a) SRF Loan use of reserve funds in $3.402M and b) use of vehicle reserve funds transfer in $136,000 more (timing between years). Water Utility’s Net Budget Activity YTD 6/30/2021 is positive $966,000 and Forecast 2021 is a positive $2,000. Page 4 of 4 FISCAL IMPACT: This financial review of actual to budget activity and year end projections for FY2021 serve as Board’s review of the District’s current financial performance. ATTACHMENTS: 1 – Annual Budget, YTD 6/20/2021 Actual, Annual Forecast - Electric Utility 2 – Annual Budget, YTD 6/20/2021 Actual, Annual Forecast - Water Utility