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Home My WebLink About10 Budget Capital Operating10 BUDGET To: Board of Directors From: Regina Wise Date: October 07, 2015 Subject: FYI and FY17 Budget Presentations: a) Operating/Capital Budget: Electric Operations b) Operating/Capital Budget: Water Operations 1. WHY THIS MATTER IS BEFORE THE BOARD This item continues the preparation process of the FY16 and FY17 Budget. 2. HISTORY District Code requires the District to prepare a two-year budget. BUDGET PROCESS SCHEDULE September 2 • Discuss the objectives, goals, assumptions, labor and debt September 16 • Discuss the Purchased Power Plan October 7 (Tonight) • Discuss the operating and capital budget for the Electric and Water Utilities October 21 • Discuss the operating and capital budgets for supporting services • Reserve funds • Revenue, rates, fees and charges • Present the Financial Master Plan November 4 • Review final Purchase Power Plan • Present a draft of the FY16 & FY17 Budget • Ten -Year Financial Master Plan Projection • Hold a public hearing regarding the budget November 18 • Adopt the FY16 & FY17 Budget BUDGET ASSUMPTIONS At the September 2, 2015 Board Meeting, staff presented the following budget assumptions: • 3% inflation for FY17 • No new debt • No planned electric rate increase in FY16 & FY17 • Water rate increase of 6% in FY16 • Maximum water rate increase of 5% in FY17 • Contract negotiations set union labor increases at 5% for FY16 and 3% for FY17 • An electrician is expected to be added in FY16 • An engineer is expected to be added in FY17 3. NEW INFORMATION Budget Highlights for Electric & Water Departments Electric Department Revenue • No rate increase • Budgeted revenue for the FY16 and FY17 is diplayed in the below table - The 4% decrease in FY16 revenue is due to decreased demand over last few years due to lighter winter weather patterns and aggressive conservation and energy efficiency programs - The 61 % decreased revenue for Pole Replacement/Contacts can be attributed to a correction in budgeted joint pole agreements compared to FY15 budget, FY16 and FY17 budgets reflects revenue based on current contract in place - The 7% increase in Miscellaneous Revenue is a result of increased interdeparmental rent between the Electric and Water utilities Electric Revenue Budgets %Variance FY15 FY16 FY17 FY16 vs. FY15 FY17 vs. FY16 Sales $ 21,326 $ 20,570 $ 20,776 -4% 1% Pole Replacement/Contacts 408 160 160 -61 % 0% Misc Revenue $ 11812 $ 11941 $ 11963 7% 1% Total Operating Revenue $ 23,546 $ 22,671 $ 22,899 -4% 1% Expenses Primary budget drivers for additional electric department expenses as displayed in the below table include the following: • The 6% operating expenses primary driver is 5% wage increase in FY16 • The 8% operating expenses increase in FY17 is attributed to 3% wage increase, 3% inflation on purchases and the addition of an engineer in labor • The 42% increase in Capital Expenditures in FY16 is the planned Meter Replacement Program (AM[), other capital focus includes system maintenance, and additional Master Plan projects Electric Operating Exp Budgets %Variance FYI FY16 FY17 FY16 vs. FY17 vs. FYI FY16 Operating Expenses $ 31529 $ 31737 $ 41042 6% 8% Maintenance Expenses 482 485 497 1% 2% Total O&M Expenses $ 41011 $ 41222 $ 41539 5% 7% Capital Expenditures 21568 31641 31122 42% -17% Total Department Exp. $ 6,579 $ 7,863 $ 7,661 20% -3% Water Department Revenue • Water rate increase of 6% in FY16 • A maximum increase of of 5% in FY17 • Budgeted revenue increased 6% in FY16 and 5% in FY17 Water Revenue Budgets %Variance FYI FY16 FY17 FY16 vs. FYI FY17 vs. FY16 Sales $ 10,739 $ 11,410 $ 12,084 6% 5% Misc Revenue $ 421 $ 414 $ 420 -2% 1% Total Operating Revenue $ 11,160 $ 11,824 $ 125504 6% 5% Expenses Primary budget drivers for the change as reflected in the below table for water expenses include. • The 13% increase in operating expenses for FY16 includes 5% wage increase in addition to 3% increase for inflation on purchases • The 19% decrease in Maintenance expense is attributed to two factors, the change in expense classification of labor between maintenance expense and operating expense, and FY16 and FY17 Budget is reflective of FY14 and FY15 actual expense • Capital focus will continue on the water SCADA project, meter installations, pipeline replacements, and pump station replacement (the Ponderosa Palisades pump station is anticipated during this budget cycle) Water Budgets %Variance FY15 FY16 FY17 FY16 vs. FY15 FY17 vs. FY16 Operating Expenses $ 11994 $ 21262 $ 21322 13% 3% Energy Costs 11307 1,204 11216 -8% 1% Maintenance Expenses 13440 11166 11297 -19% 10% Total O&M Exp $ 4,741 $ 41632 $ 41835 -2% 4% Capital Expenditures 11825 11898 11914 4% 1% Total Department Ex $ 61566 $ 61530 $ 67749 1 -1% 3% 4. FISCAL IMPACT This budget workshop is part of the overall spending for the next two fiscal years. bu dget process that will affect the District's 5. RECOMMENDATION Receive this report and provide comments to staff. Regina Wise Accounting and Finance Manager Michael D. Holley General Manager