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HomeMy WebLinkAbout7-Consideration of FY13 Year-End Financial Results and Routine TransfersAgenda Item #7 To: From: Date: Subject: Board of Directors Robert Mescher February 05, 2014 Consideration of FY13 Year-End Financial Results and Routine Transfers ACTION 1. WHY THIS MATTER IS BEFORE THE BOARD Title 3, Section 3.02.010.2 of the District Code requires the budget performance to be reviewed at a Board workshop semiannually after the close of June and December accounting periods for each fiscal year. 2. HISTORY The FY13 budget was adopted November 16, 2011 and additional transfers and budget carry-overs were authorized on February 20, 2013. The FY13 mid-year results were reviewed on July 17, 2013 and no changes were made to the FY13 budget. 3. NEW INFORMATION Preliminary FY13 results indicate that both the Electric and Water Departments exceeded the budget expectation and ended the year with net operating income in excess of budget. Staff proposes a transfer from the Water capital reserve to fund the Board-approved 2013 pipeline replacement and to increase the Electric capital reserves with the remaining unallocated funds. The number of Electric and Water customers were 13,283 and 12,551 respectively, and were slightly higher than the budgeted 13,200 and 12,400. The average number of employees was 65 which is on target with the FY13 Budget. ELECTRIC DEPARTMENT The net rate-funded excess for the Electric Department was $969,000 as compared to the budget. Operating revenue was 1% higher than budget primarily due to $620,000 (3% increase in revenue) received from unbudgeted carbon auction proceeds from California's Cap and Trade Program, less a 2% decrease in revenue in due to milder winter weather. Operating expenses, excluding purchased power were $535,000 (6%) less than budgeted. Purchased power expense was on target with the budget. The overall net operating income of $4,286,000 was $880,000 more than budgeted. Other income and expenditures were on target with the budget except for Investment Income and transfers to the Cap & Trade AB32 Reserve. The investment income was recorded as a loss due to a downward market adjustment of investments. The Government Accounting Standards Board (GASB) requires the recording of the market adjustment, however, the loss is only a "paper loss" and will never be realized. The unbudgeted proceeds from the Cap & Trade were authorized by the Board to be transferred to the reserve earlier in FY13. The rate funded capital projects were $ Robert Mescher Michael D. Holley Administrative Services Manager General Manager $754,000 less than budgeted due to the postponement of the Donner Lake Substation project. The completion of that project was included in the adopted FY14 and FY15 Budget. Attachment 1 reports the actual results of FY13 as compared to the adopted budget for the Electric Department. WATER DEPARTMENT The net rate-funded deficit for the Water Department was $231,000 as compared to the budget. Operating revenue was $118,000 (1%) higher than budget. Operating expenses were $473,000 (6%) less than the FY13 budget primarily due to less power needed to pump water. The net operating income for the Water Department was $591,000 more than budgeted. Other income and expenditures were on target with the budget except for investment income for the same reason as explained above for the Electric Department. Rate-funded capital projects were $741,000 more than budgeted due to the much needed 2013 pipeline replacement project and other smaller projects that were approved by the Board in FY13. The reduced pumping costs are a direct benefit of the pipeline replacement. Attachment 2 reports the actual results of FY13 as compared to the adopted budget for the Water Department. TRANSFERS AND CARRY-OVERS Attachment 3 lists the routine year-end transfers for FY13. FACILITIES FEES The District establishes and collects facility fees on new developments for electric and water system improvements attributable to new developments in accordance with the Electric and Water Master Plans. Attachment 4 reports the status of the restricted Facilities Fees Fund as of the end of FY13. The report presumes the Board authorizes the above transfers, using up the balance of both the Electric and Water Facilities Fees. The District is in compliance with spending facilities fees within the mandated 5- year period. 4. FISCAL IMPACT The excess from FY13 can be used to increase the Electric and Capital Reserve, and the Water Capital Reserve can be utilized to partially fund unbudgeted board-approved FY13 capital projects. Attachment 5 shows the beginning balances of the various reserve funds and the ending balances after the proposed transfers. 5. RECOMMENDATION Authorize the transfers as listed in Attachment 3.