HomeMy WebLinkAbout17 2023 Mid Year Financial Update AGENDA ITEM #17
Public Utility District m
MEETING DATE: August 2, 2023
TO: Board of Directors
FROM: Michael Salmon, Chief Financial Officer
SUBJECT: 2023 Mid-Year Financial Update
APPROVED BY:
Brian C. Wright, General Manager
RECOMMENDATION:
Accept and file the 2023 mid-year financial update.
BACKGROUND:
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 budget to actual reports included herein are consolidated reports 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.
ANALYSIS AND BODY:
General Comments:
On May 11, 2023, the US CDC ended the federal COVID-19 Public Health Emergency
declaration. With the pandemic essentially declared over by Federal and State
authorities, the District customer account arrearages remain slightly elevated as
compared to historical averages. As of June 30, 2023, 2.3% of customers were 30
days past due, 0.4% 60 days past due, and 0.3% (or 93 accounts) were past due 90+
days. Below is trend information for customer account balance amounts for 90+ days
past due for electric and water utilities combined.
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5300,000
$259,938
5250,000
$213,065
$200,000
5150,000
$111,025
5100,000 $91,243
561,905
$50,000 $43,612
$36,887
$12,240 $13,658
6/30/2019 12/31/2019 6/30/2020 12/31/2020 6/30/2021 12/31/2021 6/30/2022 12/31/2022 6/30/2023
The above balances are post-application of$195,000 in federal financial aid (ARPA)
and $162,000 provided in pandemic relief by the District to 562 customer accounts.
Current inflation rates have recently softened from forty+ year highs one year ago. US
inflation figures over the last five years through June 2023 (3.1%) are as follows:
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2020 2022
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Year to date, the District has managed to operate generally within budget (other than
certain capital projects bids, fuel costs, and purchased power) and obtain the majority
of supplies and materials within reasonable timelines. The District has experienced
notably extended lead-times in procurement of certain transformers, poles and meter
materials. The District continues to proactively address core supply and material
inventories to mitigate potential future issues in obtaining these core operational items.
Electric Utility (Attachment 1):
Billed accounts in June 2023 were 14,665 and Year to Date (YTD) the number of billing
accounts is up 0.6% from last year. YTD billed KWH of 95.1 M is up 8.4% on a per day
billed basis and KWH billed per customer per billing day is up 7.8% YTD compared to
last year. This increase is primarily attributed to a colder winter and spring this year as
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compared to last, as all months' YTD were up compared to the prior year, except for
June. The growth in electric vehicle charging is also a component of the increased
demand from prior year.
For residential accounts, the average KWH per month was up 8.1% compared to last
year, attributed primarily to weather and increased second home usage. Residential
accounts have a meter type mix of 40% Primary and 60% Secondary. Further details
are presented below:
KWH Usage Average per Residential Account
Change Change
Jan -Jun 2023 2022 2021 2023 to '22 2023 to '21
Primary 880 839 885 41 4.9% (4) -0.5%
Secondary 587 527 550 60 11.3% 38 6.9%
Combined 704 651 680 53 8.1% 23 3.4%
For commercial accounts, KWH usage was up 7.8% YTD compared to last. The top 20
customers (most multiple accounts/meters) represent 60% of commercial KWH billings
with an increase of 7.4% in KWH usage and a 1% increase in KW demand.
Operating Revenues YTD 6/30/2023 of$18.91 M are 56% of the annual budget, which
equates to a favorable $1.95M. Compared to budget, residential sales are up 7% to
budget and commercial sales are up 7% to budget. Miscellaneous revenues are
generally on budget. The annual forecast operating revenue of$35.36M is favorable to
budget $1.44M or 4%.
Operating Expenses YTD 6/30/2023 of $7.42M are 54% of the annual budget, which
equates to an unfavorable $0.51 M. Electric operations is at 59% of the annual
budget, which equates to an overage of$0.64M and is driven primarily by timing
between months of labor charged to operations versus capital, actual versus straight
line budget spread (nominal actual charged capital projects YTD, will occur in
summer/fall months, whereas budget is spread evenly over twelve months). YTD
Electric operations payroll direct (capital and operating combined) is $43,000 or 2.6%
under budget driven by $190,000 in net position vacancies offset by $147,000 over
budget in overtime caused by storms/outages. Electric operations vendor expenses
YTD are 5% under budget. The electric operations annual forecast of$7.32M is 103%
or $214,000 over budget, driven by fewer hours charged to capital projects (with
vacancies offsetting overtime). Administrative Services and IT cost centers are
running 3% over budget YTD, attributed to timing between months, and both are
forecasted to be on budget for the year. Cost center Building Maintenance is running
8% or $61,000 over budget YTD, driven primarily by snow removal and natural gas
utility costs. The Building Maintenance annual forecast is 10% or $74,000 over budget
due to snow removal and natural gas utility costs. All other departments are running at
or below budget for the year and annual forecast. The annual forecast for Operating
Expenses is $13.99M, over budget by $169,000 or 1.2% to budget.
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Purchased power cost YTD 6/30/2023 of$7.95M is 57% of the annual budget and
equates to an unfavorable $0.96M. This YTD cost overage is driven by increased
customer demand (big winter) for +$1.07M (8%), higher average wholesale purchased
power costs for +$0.37M (4%), offset by CVPIA litigation settlement received of -
$0.48M. The cost per MW from primary power supplier UAMPS was $119 in January
and has averaged $62 for February through May. The Dec'22 ($122/MW) and Jan'23
cost spikes were experienced throughout the western US and are attributed primarily to
a natural gas supply issue. The annual forecast for purchased power of $15.22M is
unfavorable $1.24M or 9% to budget in purchased power driven by increased demand,
particularly the 1 st half of the year and January's cost deviation. The CVPIA funds
received will be reviewed by the board for transfer to rate reserve in fall 2023.
Capital Expenditures YTD 6/30/2023 of $1.05M are 17% of the annual budget, under-
running due primarily to timing of projects for the year and between years. The annual
forecast is $6.48M, under budget $0.14M / 2% in expenditures for the year The 2023
projects are numerous, with the largest single dollar project being pole replacements for
$527,000. Electric's debt issuance proceeds of $6.5M have not been expended and
are currently forecasted to be expended in FY24 and FY25.
Electric, other cash flow items:
Investment income is significantly over budget YTD and forecasted to be favorable to
budget $83,000 for the year. Interest rates have increased since the conservative
budget was established in fall 2021. For example, LAIF yield: August
2021 0.22% May 2023 2.99%.
Debt service for Electric of$216,000 YTD and the $431,000 annual forecast are on
budget.
A non-budgeted transfer in flow of $2.36M (from the Rate Reserve Fund) was approved
in April 2023. This transfer offsets the exceptional cost per MW overages for wholesale
purchased power in 2022 and January of 2023. The replenishment of the Rate
Reserve Fund for this draw will be reviewed this fall as part of the FY24 FY25 budget
cycle and cost of service analysis (rate study). Refer to Attachment 3 for an electric
utility reserves overview.
Other transfers In/Out has a budget of Net In Flow of$0.97M and is forecasted to be
$0.67M, with the lower net amount due to less capital expenditures driving less use of
capital reserve funds than budgeted.
Electric Utility's Net Budget Activity YTD 6/30/2023 is a positive $4.51 M. The annual
forecast for 2023 is a positive $2.35M and compares favorably by $2.30M to the Budget
2023 of $0.05M. Excluding the Rate Reserve transfer in of $2.36M, the variance is
negative $0.06M.
The Forecast for the year is a net favorable $2.30M to budget and can be summarized
as follows:
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• ($0.17M) capital expenditures net of capital reserves utilization, over
budget (timing between years)
• $1.45M revenues favorable to budget 4%
• ($0.17M) expenses unfavorable to budget 1%
• ($1.24M) purchased power unfavorable to budget 9% ($1.72M or 12%
excluding CVPIA legal settlement credit)
• $0.06M investment income over budget due to higher interest rates
• $0.01 M debt service under budget $10k
• $0.06M subtotal
• $2.36M rate reserve transfer in
• $2.30M total
Electric Utility's key reserve balances:
The operating reserve balance as of 6/30/2023 was $7.95M and is $1 .04M or 15% over
the policy goal of 50% of the annual operating budget. For year-end 2023, the balance
is forecasted to be on budget at $6.92M. The rate reserve balance as of 6/30/2023 was
$4.77M and is $2.22M or 30% under the policy goal of 50% of the annual purchased
power budget. This deficiency in the reserve balance rate will be addressed in the
FY24/25 budget cycle and accompanying cost of service analysis this fall. The capital
reserve balance of 6/30/2023 was $11.42M and is $7.33M over the budgeted year-end
balance, driven by prior year delays in certain planned capital projects. The restricted
debt issuance project fund balance as of 6/30/2023 was $6.62M and is forecasted to be
$6.74M at year-end.
Water Utility (Attachment 2):
Billed accounts in June 2023 are 13,606 and Year to Date (YTD) the number of billing
accounts is up 0.8% to last year. YTD billed gallons of 327M are down 5% to prior
year. Billed gallons per customer per day YTD June of 134 are down 6% to last year
(residential down 6% and non-residential down 4%). This decrease is attributed to a
wet winter and spring as compared to the prior year.
Operating Revenues YTD 6/30/2023 of$8.40M are 47% of the annual budget, which
equates to an unfavorable $488,000 on a straight-line budget spread basis. The YTD
June historical average is 42% of annual revenues, producing a 5% favorable variance.
Miscellaneous revenues are generally on budget. Annual forecast operating revenues
of $17.90M are favorable $118,000 or 1% to budget
Operating Expenses YTD 6/30/2023 of $5.66M are 49% of the annual budget, which
equates to a favorable $125,000. Water operations at 48% of the annual budget is
pacing under budget primarily due to timing between months, with the annual forecast
to be on budget. Administrative Services and IT cost centers are running 2% and 8%
respectively over budget YTD, attributed to timing between months, and both are
forecasted to be on budget for the year. The interdepartmental rent is running on
budget YTD. The rent annual forecast is 17% or $100,000 under budget due to less
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depreciation expense than budgeted, partially offset by water's share of the overage
previously noted in electric's building maintenance costs. All other departments are
running at or under budget pace and forecasted to be at or below budget for the
year. The annual forecast for Operating Expenses is $11.43M, a favorable $151,000 or
1% to budget.
Capital Expenditures YTD 6/30/2023 of $2.55M are 17% of the annual budget, under-
running due primarily to timing of projects for the year and between years. The annual
forecast is $17.36M, over the budget by $2.09M primarily due to timing of projects
between years. The water utility's 2022 debt issuance project proceeds of $15.94M are
forecasted to be fully expended by the end of 2023, as planned. Water facility fees
project utilization forecast includes $0.95M for water 6170 tank #2 a portion (budget
$1 M) and $0.65M for the West River Street bridge over Truckee River project (not
budgeted, funds available).
Water, Other cash flow items:
Investment income is significantly over budget YTD and forecasted to be favorable to
budget $210,000 for the year. Interest rates have increased since the budget was
established in fall 2021. For example, LAIF yield: August 2021 0.22% May
2023 2.99%.
Debt service for water budget and forecast is $1.99M.
The transfer in from debt issuance project proceeds is forecasted at $11.82M for 2023,
which is $2.9M greater than the budget. This variance is due to expenditure timing for
applicable projects between FY22 and FY23. Other transfers In/Out has a budget net
inflow of$2.33M and is forecasted to be $2.12M, attributed to less capital reserves
transfer in necessary.
Water Utility's Net Budget Activity YTD 6/30/2023 is a positive $1.05M, Forecast 2023
is a positive $1.27M, and Budget 2022 is a positive $.025M. The Forecast for the year
is a net favorable $1.03M to budget and can be summarized as follows:
• $0.56M capital expenditures net of capital reserves utilization, less than
budget (timing between years)
• $0.12M revenues favorable to budget 1%
• $0.15M expenses favorable to budget 1%
• $0.19M investment income over budget due to higher interest rates
• $0.01 M debt service under budget $7k
• $1.03M total
Water Utility's key reserve balances:
The operating reserve balance as of 6/30/2023 was $9.49M and is $3.70M or 63% over
the policy goal of 50% of the annual operating budget. For year-end 2023, after capital
expenditures in summer/fall and other budgeted uses, the balance is forecasted to be
on budget at $6.79M or $1 M over policy target balance. The capital reserve balance of
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6/30/2023 was $1.05M and is budgeted and forecasted to be utilized during the
remainder of 2023 for capital expenditures. As part of the budget cycle this fall, staff
and the board will review and consider a transfer from operating reserve to capital
reserve . The restricted debt issuance project fund balance as of 6/30/2023 was $10.24M and is
forecasted to be zero at year-end.
GOALS AND OBJECTIVES:
District Code 1 .05.020 Objectives:
1. Responsibly serve the public.
6. Manage the District in an effective, efficient and fiscally responsible manner.
District Code 1 .05.030 Goals:
1. Manage for Financial Stability and Resiliency
FISCAL IMPACT:
This financial review of actual to budget activity and year end projections for FY2023
serve as Board's review of the District's current financial performance in accordance
with District Code.
ATTACHMENTS:
1. Electric 2023 Mid-Year Budget Comparison and Annual Forecast
2. Water 2023 Mid-Year Budget Comparison and Annual Forecast
3. Electric Reserves Brief
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Truckee Donner Public Utility District Attachment 1
2023 Mid-Year Budget Comparison and Annual Forecast Electric Utility
Electric Utility 2023 2023 - 12 Month
Annual YTD 6/2023 % of Annual % of
Budget Actual Budget Forecast Budget
Revenue
Residential $ 18,756,168 $ 10,641,026 57% $ 19,392,000 103%
Commercial 12,689,444 7,213,883 57% 13,628,000 107%
Interdept. Sales 1,489,959 595,892 40% 1,460,000 98%
Standby 16,600 - 0% 17,000 102%
Joint Pole and Pole Attachments 278,617 90,869 33% 279,000 100%
Misc Revenue 116,364 85,978 74% 116,000 100%
Interdeptmental Rent 572,076 286,038 50% 472,000 83%
Total $ 33,919,228 $ 18,913,685 56% $ 35,364,000 104%
$ 1,444,772 var to B
Operating Expenses
Board of Directors $ 386,344 $ 87,998 23% $ 348,000 90%
General Management 1,533,653 733,866 48% 1,518,000 99%
Administrative Svcs. 1,476,195 779,400 53% 1,476,000 100%
Conservation 915,162 299,937 33% 851,000 93%
Operations 7,105,456 4,197,279 59% 7,319,000 103%
IT/GIS 1,661,373 885,406 53% 1,661,000 100%
Building Maintenance 744,787 433,706 58% 819,000 110%
Total $ 13,822,970 $ 7,417,591 54% $ 13,992,000 101%
$ (169,030) var to B
Purchase Power Expense $ 13,982,000 $ 7,950,400 57% $ 15,221,000 109%
$ (1,239,000) var to B
Operating Revenue less Expenses $ 6,114,258 $ 3,545,694 58% $ 6,151,000 101%
$ 36,742 var to B
Capital Expenditures
Rates $ 5,854,773 $ 1,013,622 17% $ 5,366,000 92%
2022 COP Debt Project Proceeds - - 0% - 0%
Capital Reserve - 3,671 0% 104,000 0%
Vehicle Reserve 763,164 35,716 5% 1,008,000 203%
Facility Fees - - 0% - 203%
Total $ 6,617,937 $ 1,053,009 16% $ 6,478,000 98%
$ 139,937 var to B
Other Non-Operating Cash Flows
Investment Income $ 27,000 $ 41,512 154% 83,000 307%
Debt Service $ (441,491) $ (215,591) 49% (431,000) 98%
Transfer In, Rate Reserve $ - $ 2,360,000 0% 2,360,000 NA
Transfers In (Out), all other $ 967,164 $ (170,613) -18% 665,000 69%
Net Budget Activity - Electric $ 48,994 $ 4,507,993 n/a $ 2,350,000 n/a
$ 2,301,006 var to B
7/14/2023 4:46 PM I:\Budget Reports\2023\2023-06 Operating Report Electric 1st Half
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Truckee Donner Public Utility District Attachment 2
2023 Mid-Year Budget Comparison and Annual Forecast Water Utility
Water Utility 2023 2023 - 12 Month
Annual YTD 6/2023 % of Annual % of
Budget Actual Budget Forecast Budget
Revenue
Residential $ 15,382,349 $ 7,438,524 48% $ 15,477,000 101%
Commercial 1,970,349 805,749 41% 1,994,000 101%
Standby 102,647 - 0% 103,000 100%
Misc Revenue 328,370 160,078 49% 328,000 100%
Total $ 17,783,715 $ 8,404,350 47% $ 17,902,000 101%
$ 118,285 var to B
Operating Expenses
Board of Directors $ 226,350 $ 71,780 32% $ 204,000 90%
General Management 1,412,007 684,329 48% 1,398,000 99%
Administrative Svcs. 1,450,006 752,425 52% 1,450,000 100%
Conservation 98,645 9,684 10% 84,000 85%
Operations 6,952,558 3,361,756 48% 6,953,000 100%
IT/GIS 867,412 498,956 58% 867,000 100%
Interdepartmental Rent 572,076 286,038 50% 472,000 83%
Total $ 11,579,054 $ 5,664,969 49% $ 11,428,000 99%
$ 151,054 var to B
Operating Revenue less Expenses $ 6,204,661 $ 2,739,381 44% $ 6,474,000 104%
$ 269,339 var to B
Capital Expenditures
Rates $ 5,152,893 $ 782,985 15% $ 3,632,174 70%
2022 COP Debt Project Proceeds 8,965,975 1,765,267 20% 11,822,000 132%
Capital Reserve - - 0% - 0%
Vehicle Reserve 157,720 - 0% 279,059 203%
Facility Fees 1,000,000 1,183 0% 1,628,770 203%
Total $ 15,276,588 $ 2,549,435 17% $ 17,362,003 114%
$ (2,085,415) var to B
Other Non-Operating Cash Flows
Investment Income $ 22,000 $ 106,191 483% 210,000 955%
Debt Service $ (1,993,917) $ (993,744) 50% (1,987,000) 100%
Transfers In, Debt Project Funds $ 8,965,975 $ 1,765,267 11,822,000 132%
Transfers In (Out), all other $ 2,327,229 $ (18,746) -1% 2,117,000 91%
Net Budget Activity -Water $ 249,360 $ 1,048,916 n/a $ 1,273,997 n/a
$ 1,024,637 var to B
7/14/2023 4 47 PM I'\Budget Reports\2023\2023-06 Operating Report Water 1st Half
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Electric Utility - Budget and Key Reserves TRUCKEE DONNER
Public
2023 Budget- Electric Utility- Outflow of Funds of$35.9 Million
Chart $ in Thousands
$441
$13,982 $13,823 A
$1,045
■Purchased Power (39%) ■Operating Expenses (39%) ■Capital Expenditures (18%)
■Reserve Deposits (3%) ■Debt Service (1%)
The above big three (power, operating, capital)categories represent 95% of Electric's annual operating expenditures.
The District has three reserve funds (cash)specific to the big three, which provide a financial contingency funds source in the event of a material variance to Budget.
Rate Reserve Operating Reserve Capital Reserve
$ 6,845,380 December 31, 2022 Balance $ 6,522,389 December 31, 2022 Balance $ 11,310,640 December 31, 2022 Balance
$ 6,991,000 Target Balance DC $ 6,911,000 Target Balance DC $ 6,439,000 Target Balance DC
50% of Annual Purchased Power Budget 50% of Annual Operating Expense 100% of Annual Average Capital Expenditures
(5yrs forward CIP average annual)
When purchased power costs materially exceed Budget, If Operating Expense costs materially exceed Budget, The Captial Reserve serves as the savings account for
the Rate Reserve can be utilized to mitigate this impact. the Operating Reserve decreases. The operating reserve capital expenditures. To the extent planned capital
Otherwise,the Operating Reserve would take the charge. is the General Fund,there is no'transfer'necessary if this expenditures are delayed,the reserve balance builds up
occurs. until the capital expenditure occurs. A transfer from the
In 2023,the Budget included$210,000 funding to the Operating Reserve to Capital Reserve needs to be made
Rate Reserve to reflect the budgeted amount of power All cash flow payments occur through the operating for this delay in capital spend to be in the appropriate
costs increase from 2022 to 2023. account of the District. For example,the variances for reserve account.
purchase power costs,typically not material in nature,
In April 2023,the Board approved a$2.36M transfer impact the operating reserve balance. In order for a Delays is projects for various reasons the last three years
out of Rate Reserve to Operating Reserve,due to the material varinace in purchase power to NOT impact the have caused a build-up in the Capital Reserve balance.
material variance over budget in power costs in fall'22 operating reserve,a Rate Reserve transfer would be
and Jan'23. required. One such transfer was approved in April 2023
in the amount of for$2.36M.
Replenishment of the rate reserve utilization can be spread
over a time frame greater than 12-months,thereby lowering Important to note, reserve balances are'cash funds',therefore a material
the impact on rate payers monthly bills. expense variance in for example December(when cost/event occurs),will typically impact
reserve cash balance in following month January,when invoice(s)are paid.
This accrual versus cash difference is relatively consistent year to year, but not always.
oc_per District Code,Title 3 For example the Dec'22 purchase power costs significantly over budget,while the paid'cash flow'was in January for this item.
7/25/2023 I:\Budget Reports\2023\Charts Budget Reserves Charts(2)
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