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Home My WebLink About17 Power Point Budget 2022 2023 Workshop #2 October 6, 2021 1 Workshop #2-Budget 2022/2023 Budget 2022/2023 2 Financial Master Plan•Reserves•Capital Expenditures and Debt•Personnel changes•Operating Expense changes•Electric and Water–Current draft Budget Summary •Purchased Power•Introduction•Today’s Agenda AgendaAgenda Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 3 IT/CyberRegulatoryReservesGoalsInitativesPlan Strategic MaintRepairs & PersonnelDebt ServiceInvestmentCapital act for manydoing a balancing balanced budget a BackgroundBackground Workshop #2-Budget 2022/2023 Workshop #2- The 4 BACKGROUND / HISTORYBACKGROUND / HISTORY Workshop #2-Budget 2022/2023 Workshop #2-Budget 2022/2023 Budget 2022 & 2023Review and approval of –Public Hearing and Action Item –(6pm start) 3, 2021November services, Revenue/Rates, Reserves & Financial Master Plan draftsOperating and Capital Budgets for all support –Workshop #3 –7pm) -(5pm20, 2021October Notice of 11/3/2021 Public Hearing on Budget 2022 & 2023 ApprovalBudgets for Electric and Water Utilities, and Financial Master Plan drafts; Public Hearing Purchased Power Plan, Operating & Capital –Workshop #2 –(tonight)6, 2021October Assumptions Discussion of Goals, Objectives, and Key -#2 Workshop –18, 2021 August schedule is as follows:2023 workshops and approval -2022current Board approved (6/16/2021) Budget Budget 2022/2023 5–Work Life Balance•commitmentsMeet our goals and –Timeliness•Own it–Accountability•ethicalHonest and –Integrity•Send and receive –Communication•Safety is our way –Safety •Values of the District•at the lowest practical cost. resources in a safe, open, responsible, and environmentally sound manner reliable, high quality utility and customer services while managing District The Mission of the Truckee Donner Public Utility District is to provide •Alignment with the Mission and Values of the District•Goals and Objectives -Budget 2022 and 2023 New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 6 and successGoal #5: Developing and inclusive culture drives organizational integration •add value to the communityGoal #4: Take the best of private sector thinking to modernize the utility and •transparent way to identify opportunitiesGoal #3: Engage with our customers and communities in a welcoming and •Goal #2: Environmental Stewardship•Manage for financial stability and resiliency#1: Goal •Goals-Alignment with the Strategic Plan of the District •Goals and Objectives -Budget 2022 and 2023 New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 7 GenerationClean Power Local •% Clean Renewable100••Undergrounding of Overhead Power Lines•Initiatives-Alignment with the Strategic Plan of the District •Goals and Objectives -Budget 2022 and 2023 New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 8 identified in the Strategic Plan. Refer to Strategic Plan for additional details.Goals, as and 2023 Budget includes specific sub goals of each of the above 2022 The successGoal #5: Developing and inclusive culture drives organizational integration and •Goal #4: Take the best of private sector thinking to modernize the utility and add value to the community•Goal #3: Engage with our customers and communities in a welcoming and transparent way to identify opportunities•Goal #2: Environmental Stewardship•Manage for financial stability and resiliency#1: Goal •Strategic Plan Goals–Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 9 The 2022 and 2023 Budget needs to include resources to further momentum on •solar, hydro or biomass energy-Local Clean Power Generation•100% Clean Renewable•High Speed Broadband•Undergrounding of Overhead Power Lines•Strategic Plan Initiatives–Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 in 2017MWh161,518 in 2018MWh158,790 in 2019 MWh160,683 in 2020 MWh166,209 10)MWhHours (-Megagwatt)Last Twelve Months (LTM 6.9%–Variance to 2019 3.4%–Variance to 2020 LTM August 2021–MWh171,793 Jan’21 to Aug’21, Actual–MWh114,451 Sep’20 to Dec’20 Actual–MWh57,342 MWhof 172,651 represents a 0.5% increase over the LTM MWhThe Budget 2022 ••growingis Demand •conservative either (have rate reserve)-Not a line item miss in Budget; not a line item to be ultra•Budget.in approximately 53% of Electric Utility’s operating expenses, therefore an important estimate Represents •Purchased Power–Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 11 MHhDollars in Thousands except for Cost/)MWhHours (-Megagwatt)Last Twelve Months (LTM+$273K/2.1% cost/ ++MWh$321k/2.4% +B22 vs B21 Variance:Purchased Power-Budget Draft New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- NEW INFORMATION 12 Dollars in Thousands NEW INFORMATION NEW INFORMATION 13 Dollars in Thousands NEW INFORMATION Budget 2022/2023 14$470 / 1.9% All other changes, net•$443 / 1.8% Strategic organization structure changes•$311 / 1.3% Strategic plan initiatives•including overhead impact(4.5% in 2022), $338 / 1.4% Labor rate of pay increase •$500 / 2.1% Wildfire defensible space increase•$594 / 2.5% Purchased Power increase (discussed previously)•Variance explanation:–up $2,656 or 11.0% compared to B21 $26,824-Operating Expenses B22 -Electric $ thousands New Information $ thousands New Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 15 B22 has ben increased to $1,530•budget levelIn 2020 and 2021, the Board approved $500,000 increase each year to this •B21 included $1,030 for contract services related to wildfire defensible space•Wildfire Defensible SpaceOperating Expenses B22 -Electric $ thousands New Information $ thousands New Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 16 pension costsAmounts include overhead impact on payroll taxes, workers compensation, •MOU specifies October BLS figure, subject to 5.0% maximum•W in August was 4.9%, next update is October-Fed BLS CPI•$234 impact of draft 4.5% rate of pay increase for 2022•B20/B21 assumed 3.0% and 3.0% , Actual ~6% and 2% •expectations$104 impact of rate of pay increases in 2020 and 2021 greater than Budget •Operating Labor Increase of $338Operating Expenses B22 -Electric $ thousands New Information $ thousands New Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 17 Survey services (Dept. Gen.Mgmt–15 $•Avian program development (Dept. ELOps)–30 $•(Dept. ELOps)safety programs, costs increases $23 and new SDS subscription $25 –48 $•services (Dept. Gen.Mgmt)Micro imaging Laserfiche & –28 $•Grant application/writing professional services (Dept. Gen.Mgmt)–$30 •Undergrounding, Broadband, 100% Clean Renewables, Local Generation•$160 professional services to continue momentum on Board Initiatives Big4•Strategic Initiatives, vendor items of $311Operating Expenses B22 -Electric $ thousands New Information $ thousands New Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 18 FTEs General Services organizational structure changes, add 2 -345 $•)(across all departments Compensation Study contingency, including overhead –$ 64 •(Dept. ELOps)drop ½ FTE, Electrician 2nd half of 2022 –132) ($•(Dept. ELOps)transfer 1 FTE, Electrician to Water Operations –($264) •(Dept. Gen.Mgmt)additional FTE, 50% Electric, Communications Specialist –$ 87 •all Depts.)Mechanic (cost charged through Transportation Overhead, across additional FTE, ~50% Electric, Vehicle –$ 94 •(Dept. Gen.Mgmt)additional FTE, 50% Electric, Safety & Risk Coordinator –$ 99 •Director (Dept. Gen.Mgmt)additional FTE, 50% Electric, Human Resources –$150 •Strategic Initiatives, personnel items of $443Operating Expenses B22 -Electric $ thousands New Information $ thousands New Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 19 2.2% All other changes, net-($217) / •$935 / 9.5% Strategic organization structure changes•$72 / 0.7% Strategic plan initiatives, vendor expenses•including overhead impact(4.5% in 2022), $338 / 3.5% Labor rate of pay increase •Variance explanation:–up $1,128 or 11.5% compared to B21 $10,922-Operating Expenses B22 -WATER $ thousands New Information $ thousands New Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 20 pension costsAmounts include overhead impact on payroll taxes, workers compensation, •MOU specifies October BLS figure, subject to 5.0% maximum•W in August was 4.9%, next update is October-Fed BLS CPI•$234 impact of draft 4.5% rate of pay increase for 2022•B20/B21 assumed 3.0% and 3.0% , Actual ~6% and 2% •expectations$104 impact of rate of pay increases in 2020 and 2021 greater than Budget •Operating Labor Increase of $338Operating Expenses B22 -WATER $ thousands New Information $ thousands New Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 21 Gen.Mgmt)Survey services (Dept. –15 $•services (Dept. Gen.Mgmt)Micro imaging Laserfiche & –$27 •)Grant application/writing professional services (Dept. Gen.Mgmt–$30 •Strategic Initiatives, vendor items of $72Operating Expenses B22 -WATER $ thousands New Information $ thousands New Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 22)(across all departments Compensation Study contingency, including overhead –$ 64 •(Dept. Water Ops)Water maintenance program lead, + 1 FTE –$177 •)Water Ops. (Dept Operations Water from Electric to transfer 1 FTE, Electrician –$264 •(Dept. Gen.Mgmt)additional FTE, 50% Electric, Communications Specialist –$ 87 •across all Depts.)Transp. OH, Mechanic (cost charged through additional FTE, ~50% Electric, Vehicle –$ 94 •(Dept. Gen.Mgmt)additional FTE, 50% Electric, Safety & Risk Coordinator –$ 99 •Director (Dept. Gen.Mgmt)additional FTE, 50% Electric, Human Resources –$150 •Strategic Initiatives, personnel items of $935Operating Expenses B22 -WATER $ thousands New Information $ thousands New Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 23 organizational structure are recommendedGoals, Objectives, Regulatory mandates; these changes to To ensure alignment with Mission, Values, and Strategic Plan; 0.5 electrician full year impact)-80.0 Full Time Equivalents, Budget 2023 (•Full Time Equivalents, Budget 202280.5 •recommended staff changes for 2022/2023+5.5 •Full Time Equivalents, currently approved75.0 •+2.0 approved changes in 2020/2021•Full Time Equivalents, currently approved73.0 •Full Time Equivalents–Personnel –Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 24 transferred from Electric Ops to Water Ops (no FTE impact)Electrician position 0 •-0.5 Electrician position eliminated beginning July 2022 (-••+1 Facilities Manager •Water maintenance program lead–Ops +1 Water •benefited)-) (nontime/seasonal helpers (1 FTE-two part–Ops +1 Water •Safety & Risk Coordinator–Administration +1 General •Analyst/TechCommunications –Administration +1 General •+ 5.5 recommended staff changes for 2022•Full Time Equivalents–Personnel –Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 25 Favorable renewal, effective rate shift from 3.2% of wages to 2.2% of wages•252k B23$$308k B21 $237k B22 -Workers Compensation •renewal coming in with modest premiums change +3.0% Medical, 0% Dental•2.9m B23$2.8m B22 $$2.7m B21 -Medical/Dental •Insurance –Personnel –Key Assumptions use of October 2021 BLS value is defined in union MOU, with 5.0% maximum cap•August was 4.9% and 4.3% at W (SFO) for June -Bureau of Labor Statistics (BLS) CPIBased on current trend of Federal •2023 for all employee classesRate of pay labor cost increase of 4.5% for Budget 2022 and 3.0% for Budget •Rate of Pay Change–Personnel –Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 26 Network System Improvements $550,000, Various IT specific $265,000 •$ level consistent with current budget-Information Technology •+ 4 in 2022 for $316,000 and +2 in 2023 for $512,000•Vehicle Additions•10 year replacement schedule updated and refined to balance cash flows y2y•Vehicle Replacements •at this timeall projects/amounts are preliminary planning -See next two pages for further information •Integrate into budget and financial master plan•Electric and Water have 10 year capital improvement plans•Capital Expenditures–Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 27 Contributed Capital projects. Refer to Attachment 3 for further details.time. Above amounts exclude projects/amounts are preliminary planning at this All •(excluding $10.5m in building* related in ’22)$5.2m average per year-2022 to 2031 –Electric •Vehicles0.76m $• all other various projects$1.45m •IT projects0.76m $• Glenshire Substation rebuild, planning costs $0.37m •ELF Deployment 0.33m $• Replacements0.76m Pole and SRIP Pole $•Upgrades$0.52m Line Extensions and • Rebuild$1.40m Martis Valley Substation •Electric 2023 $6.35m•all other various projects• $1.31m costsSubstation rebuild, planning 0.36m Glenshire $•$0.32m ELF Deployment • $0.39m Martis Valley Substation rebuild, planning costs•$0.50m Vehicles• $1.30m SCADA Reliability Phase 6•$0.65m IT projects• 1.50m District Office drainage/paving*$•0.52m Line Extensions and Upgrades• $* $3.00m District Office Building Modernization•0.90m Pole and SRIP Pole Replacements• $$6.00m new Electric Operations Building (new debt)*•Electric 2022 $16.75m ($6.25m excluding building* related 2022 items)•Electric–Capital Expenditures –Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 28 Contributed Capital projects. Refer to Attachment 3 for further details.projects/amounts are preliminary planning at this time. Above amounts exclude All •$8.33m average per year-2024 to 2031 –Water •$1.92m all other various projects•• $0.51 Pump station replacementfinancedWell replacement, new debt $0.43 •• $1.36 GeneratorNew pipeline, new debt financed 1.35m $•$1.26m Pump station rehabilitations •financednew debt replacement, 1.67m Pipeline $•Water 2023 $8.78m•four truck replacements and two trailer replacement–Vehicles $0.64m •new debt financed $1.97m New pipeline, •$0.81m all other various projects•debt financed new replacement, Pipeline $2.38m •projects$0.46m Information Technology •new debt financed , station replacementMartiswoods pump 2.72m $•$0.95m Water tank rehabilitations•new debt financed pipeline, New Water Tank (6170) and $3.00m •$1.35m Pump station rehabilitations•portionfees pipeline, facility New Water Tank (6170) and 1.00m $•Water 2022 $15.28m•Water–Capital Expenditures –Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 29 DWR Prop55 Loan (ended in 2021)-2015/2016 Refunding COPS-40% of current Pension Obligation Bonds-2023+ ~1,032,000/year to 2035•drop of $1m-$1,252,200 –2022 •$2,286,669–2021 •$2,441,989–2020 •Water Utility (excluding DLAD/SRF)both end in 2022-Dark Fiber loan-Obligation Bonds60% of current Pension -$0-2023+ •$340,729–2022 •$656,266–2021 •$648,722–2020 •Electric Utility Current LTD Debt Service BackgroundBackground Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 30 month\]per $5.93 -customers Service $960,000 \[@13,500 Debt Annual •300k B22 9.3m Total Interest Cost $•currently) % (4% used for conservatism, estimate ~3.25% 4.0Years, Interest Rate Term 25 •Various Projectsmillion, 15 $-Principal •Water•$2.53 per month\]-Annual Debt Service, $441,000 \[@14,500 customers •B22 H2 Interest only $120k$2.9m Interest Total •(4% used for conservatism, estimate ~3.25% currently) 4.0% 20 Years, Interest Rate Term •new Electric Operations Buildingfor million, $6 -Principal •Electric•New Debt Recommended Impact New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 31$30M, DS Total 17.3mPrincipal $, $12.7mTotal Interest 4.00%, years, Rate 30 Term •, DS Total $25M$16.0mPrincipal , $ 9.0mTotal Interest %, 3.75years, Rate 25 Term •20M, DS Total $Principal $14.2m , Total Interest $ 5.8m.50%, 3•month\] equates to the following Principal / Interest amounts:per $5.95 -Debt Service (DS) of $1.0m for reference purposes–Debt Service Examples New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 32 No new POBs in current DRAFT.payment. . Bond debt service payment replaces all/portion of current UAL alternativePension Obligation Bonds will be evaluated as a potential refinancing •.the PEPRA plan, the UAL payment in 2021 was $15,000For •CalPERS projects a $1.2 million UAL payment requirement in 2022. $1,036,000 with full annual payment in July 2021 (which the District paid). required minimum annual payment for 2021 was $1,071,000, discounted to Miscellaneous Plan (Traditional) Unfunded Actuarial Liability (UAL) CalPERS •$1,150,000 from prior year end. The 12/31/2020 Net Pension Liability was $14.0 million, an increase of 9% or •Pension Liability and POBs–Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 33 term savings-financing alternative, with the goal of generating long-rePension Obligation Bonds will be evaluated as a potential Net Pension Liability •3.07 Debt Issuance and Management Policy and section 3.01.03 Debt GoalsAny debt issuance will be in accordance with District Code, Title 3, Chapter •Master Plan modelIntegrate into Budget 2022/2023 cash flows, as well as, the 10 year Financial •Be aligned with District’s goals, objectives, and strategic plan•issuances, Electric and Water, as applicable; and further:Budget will assess and incorporate, as applicable, potential new debt •Debt Service / New Debt–Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 34 requesting 40%+ increase–Liberty 2022 Rate Case Comparative2020 Rates –Key BackgroundBackground Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 35 2022 and 6.0% in 2023Electric Utilities current draft recommends a rate increase of 8.5% in •wildfire mitigation costs. targets, regulatory mandates, and reserve , headwinds, including labor costs, strategic professional services firm. The cost of service includes numerous party electric cost of service -underway being performed by a thirdElectric Utility currently has an active cost of service study The •2.7% increase for 2020 3.0% increase for 2021•2017 was the first rate increase since 2009•Electric Rates–Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 36 approved water ratesStaff does not currently recommend any change to the above •.incorporation in Budget revenue expectations to balance the budgetrevenue requirement will be determined and recommended for The •2023of 8.9% for 2021, 8.9% for 2022 and 7.9% for Water rate approvals in December 2020 included an average increase •3.3% increase for 2020•Water Rates–Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 37 budgeted operating expenses, excluding depreciation and purchased powergeneral fund should have a cash reserve equal to one half of the annual Electric •revision to the following:Recommended •budgeted operating expenses, excluding depreciationgeneral fund should have a cash reserve equal to one half of the annual Electric •District code wording for Electric is as follows:Current •process.to this policy during the budget revision recommends Staff –\] 3.01.04Fund Operating Reserve \[District Code General Reserve modification–District Code –Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 38 End result, shift some General Fund dollars to Capital Reserve.. designationThe subject funds are rate generated, the reserve fund ‘bucket’ is a Board •calculation seems duplicative, considering the existence of RRIncluding purchase power costs in General Fund ‘operating’ cash reserve •RR balance is currently $6.4 million and is at target goal for 2021•balance of 50% of annual purchase power costsAlready have a separate Electric Rate Reserve (RR) with target goal reserve •operating costsAs currently written, includes Purchased Power costs, which are 53% of •Rational for 3.01.04 wording change Reserve modification–District Code –Key Assumptions New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 39 District Code (DC)New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 40 District Code (DC)New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 41 improvement plan expenditure levelyear capital -the 10primarily to the current low reserve balances compared to policy targets and Water Utility achieves the policy target balances only in the final year 2031, due •Electric Utility achieves the policy target balances most years in the plan.•balances. The key measure of financial stability for the District in the FMP is reserve •the utilitiesincorporates the 10 year capital improvement plans of FMP •FMP makes assumptions on customer growth and inflation. •balances, in activities and financial position10 year horizon view of the financial •goalsterm -understand how the proposed budget impacts longThe Financial Master Plan (FMP) is a tool to help the Board and staff •Financial Master Plan New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 42 New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 43 New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 44 New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- Budget 2022/2023 45 New InformationNew Information Workshop #2-Budget 2022/2023 Workshop #2- •46 FISCAL IMPACTFISCAL IMPACT Workshop #2-Budget 2022/2023 Workshop #2-Budget 2022/2023 30 years into the future.-debt is planned, impact 20the upcoming next two years, 2022 and 2023; and to the extent new will affect the District’s expenditures and revenue requirements for This budget workshop is part of an overall budget cycle process that There is no direct fiscal impact associated with this workshop item. •47 RECOMMENDATIONRECOMMENDATION Workshop #2-Budget 2022/2023 Workshop #2-Budget 2022/2023 Thank You 2022 & 2023Public Hearing on 11/3/2021 for the Budget Budget Schedule the •strategic direction to staff regarding Budget 2022 & 2023 preparationsthe information from this workshop item and provide A) Receive