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Home My WebLink About10 Financial PlanAgenda ' 10 TRUCKEE DONNER Public Utility District BUDGET To: Board of Directors From: Regina Wise Date: October 21, 2015 Subject: Financial Plan Review, Projected Revenue, and Projected Reserve Balances 1. WHY THIS MATTER IS BEFORE THE BOARD This item continues the preparation process of the FY16 and FY17 Budgets PA:I &1 t07 Zvi The Financial Master Plan is a tool to help the Board and staff understand how the proposed budget impacts long-term goals. It includes a projection of the revenue and expenses for FY16 through FY25 using the actual revenue and expenses for the most recent twelve months, the proposed FY16 and FY17 Budgets, and a set of assumptions. The Financial Master Plan is reviewed during the budget cycle to ensure that the proposed budget is consistent with long-term goals. 3. NEW INFORMATION The following assumptions were used for projecting the revenue and expenses for FY18 through FY25: • 1 % annual increase in customer growth. • 3% annual inflation. • No new debt. • In 2022 the rate funded debt for the water utility will be cut in half because the refunding portion of the 2006 COP and the Prop 55 debt will be paid off. • New FTE for Water Manager in 2019. • Interest earned is about 1 % until FY18 & FY19, then increases to 1.5% for FY20 and FY22, then 2% thereafter. • Starting in 2021 the cap and trade revenue could disappear. • No change in cash and reserve goal for Electric which equals 6 months of operating expenses plus $4 million in reserves. • No change to the cash and reserve goal for Water equal to $7 million. Attachment 1 is a summary of the Electric Utility's Financial Master Plan. It shows that electric rates need to be raised only minimally to complete necessary capital projects, maintain its reserve goals and adhere to the debt service requirement of 1.10. Attachment 2 graphs the reserve balances using the data in Attachment 1. The cash reserves are projected to be near the current goal by the end of FY24 and maintained at the goal with minimal rate increases. Page 1 of 8 Attachment 3 is a list of the proposed Electric Utility capital projects. Attachment 4 is a summary of the Water Utility's Financial Master Plan. It shows that the water rates need to be raised only modestly to complete high -priority capital projects and maintain the water utility reserve goals along with the required debt service requirement of 1.25. Attachment 5 graphs the reserve balances using the data in Attachment 4. To maintain a modest rate increase in FY14 and FY15 budget and continue to fund the pipeline replacement and SCADA capital projects the Board elected to use the reserve funds to fund those projects. As anticipated, the reserve balances have decreased. However, the graph shows that with modest rate increases going forward, the reserve goals can be achieved. Attachment 6 is a list of the proposed Water Utility capital projects. At the workshop, Staff will have an Excel spreadsheet -based model to demonstrate the sensitivity of revenue and cash as rates change. 4. FISCAL IMPACT The Financial Master Plan verifies that the proposed FY16 and FY17 Budgets are consistent with the District's long-term goals. 5. RECOMMENDATION Receive this report and provide comments to staff. _ �41 Regina Wise Accounting and Finance Manager Michael D. Holley General Manager Page 2 of 8 Truckee Donner Public Utility District Attachment 1 Financial Master Plan Summary FY16 through FY25 (in thousands) ELECTRIC FYI FYI FYI FYI FY20 FY21 FY22 FY23 FY24 FY25 Operating Cash Flow Operating revenue $ 22,671 $22,899 $24,041 $25,228 $26,230 $27,272 $ 28,356 $ 29,483 $ 30,655 $ 31,874 Operating expenses (20,674) (21,595) (22,243) (22,910) (23,597) (24,305) (25,035) (25,156) (25,910) (26,688) Other revenue/(expenses) (211) (177) (149) (107) (26) 37 109 169 193 215 Net Income $ 1,786 $ 1,127 $ 1,649 $ 2,211 $ 2,607 $ 3,004 $ 3,430 $ 4,496 $ 4,938 $ 5,401 Transfer from/(to) funds 3,423 3,812 2,325 2,257 2,189 2,368 388 -14 16 -241 Debt principle payments (656) (723) (795) (871) (952) (1,038) (549) - - - Capital projects (4,553) (4,216) (3,040) (2,969) (2,899) (3,078) (3,000) (3,253) (3,879) (4,219) Change in Operating Cash $ (0) $ (0) $ 139 $ 629 $ 945 $ 1,255 $ 269 $ 1,229 $ 1,075 $ 940 Cash & Reserve Balances Operating Cash Balance $ 5,194 $ 5,194 $ 5,333 $ 5,961 $ 6,906 $ 8,161 $ 8,430 $ 9,659 $ 10,734 $ 11,675 Rate Reserve Balance 4,360 4,360 4,404 4,448 4,515 4,582 4,651 4,744 4,839 4,936 Facility Fee Reserve Balance 201 452 714 637 559 476 389 298 202 98 Capital & Vehicle Reserve Balance 2,029 645 442 390 495 509 692 719 717 973 Cash & Reserve Balances $ 11,784 $10,651 $10,893 $11,436 $12,475 $13,728 $ 14,162 $ 15,420 $ 16,492 $ 17,682 Debt service coverage (1.10 required until 2022) 2.37 1.62 2.06 2.51 2.72 2.94 6.41 no debt no debt no debt Pro osed rate change 0.0% 0.0% 4.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Page 3 of 8 Attachment 2 Electric Projected Cash & Reserve Balance (in thousands) $20,000 $18,000 Goal $16,000 $14,000 $12,000 $10,000 Cash & Reserve Balances $8,000 $6,000 $4,000 $2,000 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Page 4 of 8 Operations Funded Conduit & Boxes - BWO Line Extension & Upgrades Pole Replacements Various District Projects Electric Master Plan Projects Reclosers & Regs - Field Scada Distribution Repl & Improvement Meter Replacement HQ Energy Efficient Wharehouse Lighting Electric Vehicle Charging Stations HQ Improvements IT Projects Vehicle Reserve Funded Vehicles Truckee Donner Public Utility District Electric Capital Projects FY16 through FY25 2016 2017 2018 2019 2020 2021 2022 2023 Attachment 3 2024 2025 8,136 8,330 8,580 8,837 9,102 9,375 9,657 9,946 10,245 10,552 263,876 270,424 278,537 286,893 295,500 304,365 313,496 322,900 332,587 342,565 237,027 243,322 250,622 258,140 265,885 273,861 282,077 290,539 299,255 308,233 147,141 150,977 155,506 160,171 164,977 169,926 175,024 180,274 185,683 191,253 583,835 592,247 610,014 628,315 647,164 666,579 686,577 707,174 728,389 750,241 97,234 97,983 100,922 103,950 107,069 110,281 113,589 116,997 120,507 124,122 434,012 445,538 458,904 472,671 486,851 501,457 516,501 531,996 547,956 564,394 1,710,258 1,112,820 - - - - - - 500,000 1,000,000 60,821 - - - - - - - - - 86,227 87,508 - - - - - - - - 272,500 362,000 250,000 255,000 260,100 265,302 270,608 276,020 281,541 287,171 502,382 505,752 520,925 536,552 552,649 569,228 586,305 603,894 622,011 640,672 4,403,449 3,876,901 2,634,010 2,710,530 2,789,296 2,870,374 2,953,833 3,039,741 3,628,173 4,219,203 150,000 338,432 405,657 258,414 109,852 207,413 46,507 213,598 250,631 - Total Capital Projects 4,553,449 4,215,333 3,039,667 2,968,944 2,899,148 3,077,787 3,000,340 3,253,339 3,878,804 4,219,203 Page 5 of 8 WATER Operating Cash Flow Operating revenue Operating expenses Other revenue and expenses Truckee Donner Public Utility District Financial Master Plan Summary FY16 through FY25 (in thousands) FYI FYI FYI FYI FY20 FY21 FY22 Attachment 4 FY23 FY24 FY25 $ 11,824 $ 12,504 $ 12,993 $ 13,502 $ 14,031 $ 14,444 $ 14,869 $ 15,016 $ 15,164 $ 15,313 (7,975) (8,272) (8,552) (9,085) (9,371) (9,666) (9,971) (9,916) (10,230) (10,553) (642) (586) (570) (522) (459) (397) (313) (264) (229) (201) Net income $ 3,207 $ 3,646 $ 3,871 $ 3,895 $ 4,201 $ 4,381 $ 4,585 $ 4,836 $ 4,705 $ 4,559 Transfers from/(to) funds 1,155 794 230 217 523 511 372 449 197 408 Debt principle payments (1,432) (1,482) (1,380) (1,430) (1,487) (1,377) (580) (604) (625) (654) Capital projects (2,930) (2,958) (2,869) (2,857) (3,043) (3,089) (3,736) (4,203) (4,044) (3,349) Change in Operating Cash $ - $ - $ (148) $ (175) $ 194 $ 426 $ 641 $ 478 $ 233 $ 964 Cash & Reserve Balances Operating Cash Balance $ 2,442 $ 2,442 $ 2,294 $ 2,118 $ 2,310 $ 2,735 $ 3,376 $ 3,853 $ 4,086 $ 5,049 Operating Reserve Balance 1,894 1,670 1,686 1,703 1,729 1,755 1,781 1,817 1,853 1,890 Vehicle Reserve Balance 211 280 409 551 394 245 234 148 313 272 Meter Reserve Balance 286 - - - - - - - - - Facility Fee Balance 935 933 943 957 978 1,005 1,033 1,071 1,112 1,156 Cash & Reserve Balances $ 5,768 $ 5,325 $ 5,332 $ 5,329 $ 5,411 $ 5,740 $ 6,424 $ 6,889 $ 7,364 $ 8,367 Debt service coverage (1.25 required until 2036) 1.84 2.01 2.41 2.39 2.52 2.81 5.31 5.55 5.41 5.24 Pro osed rate change 6.0% 5.0% 3.0% 3.0% 3.0% 2.0% 2.0% 0.0% 0.0% 0.0% Page 6 of 8 Attachment 5 Water Projected Cash & Reserve Balance (in thousands) $10,000 $9,000 $8,000 Goal $7,000 $6,000 $5,000 Cash & Reserve Balances $4,000 $3,000 $2,000 $1,000 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Page 7 of 8 Attachment 6 Truckee Donner Public Utility District Water Capital Projects FY16 through FY25 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Rate Funded/Op Reserves Pipeline Replacement 1,457,846 1,464,080 1,700,000 1,734,000 1,661,340 1,690,567 1,741,284 1,793,522 1,847,328 1,902,748 Wells - - - - - - 700,000 1,000,000 1,000,000 - Meters - - 106,090 108,212 109,294 111,480 114,824 118,269 121,817 125,471 Pump Station 96,603 103,728 318,270 324,635 327,882 334,439 344,473 354,807 365,451 376,414 Tanks 57,790 60,131 106,090 108,212 109,294 111,480 114,824 118,269 121,817 125,471 Misc IT - - 600,000 550,000 496,000 505,920 521,098 536,731 552,832 569,417 Scada Reliability 277,195 277,096 - - - - - - - - Water SCADA Replacement 632,085 551,978 - - - - - - - - Various IT Projects 122,994 123,845 - - - - - - - - Total Rate Funded Capital 2,644,513 2,580,858 2,830,450 2,825,059 2,703,810 2,753,886 3,536,502 3,921,597 4,009,245 3,099,523 Funded from Vehicle Reserve Vehicles Funded from Meter Reserve Meters 91,398 38,236 31,765 339,673 335,088 199,791 281,371 34,631 249,885 285,275 285,933 - - - - - - - - Total Capital Projects 2,929,788 2,958,189 2,868,686 2,856,824 3,043,483 3,088,974 3,736,293 4,202,968 4,043,876 3,349,408 Page 8 of 8