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Home My WebLink About#9 Finance Master Plan Agenda Item # 9 TRUCKEE DONNER u �'.)hc Utility BUDGET To: Board of Directors From: Bob Mescher Date: November 04, 2009 Subject: Finance Master Plan 1. WHY THIS MATTER IS BEFORE THE BOARD This item continues the preparation process of the FY10 and FY11 budget. 2. HISTORY 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 FY09 through FY20 using the actual revenue and expenses for the first eight months of FY09, the proposed FY10 & FY11 budget, and a set of assumptions. The Financial Master Plan should be reviewed 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 FY12 through FY20: • Customer growth increases 0.5% in 2012, 0.75% in 2013, and 1.0% thereafter • Standby fees decrease by 1% per year • Interest earnings are 3% per year • Expenses increase 3% per year for inflation • Purchased power costs increase by 9% in 2012, 8% in 2013 due to the end of the SCE contract and carbon legislation A summary of the Financial Master Plan is attached. It shows that the Electric Department will meet its reserve goals by 2014 if the proposed 2011 rate increase is approved (Version 1). If the proposed 2011 electric rate increase is not approved, the Department will not reach its reserve goals (Version 2). The Water department will meet its reserve goals by 2010 with the proposed rate increases. 4. FISCAL IMPACT The Financial Master Plan shows that the proposed FY10 & FY11 budget is consistent with the District's long-term goals. 5. RECOMMENDATION Receive this report and provide comments to staff. Mary Chapman Michael D. Holley Administrative Services Manager General Manager Truckee Donner Public Utility District This summary includes Financial Master Plan Summary %Includes a$1.8 million transfer the proposed 2011 from the purchase power buy- electric rate increase of FY09 through FY20 3% (in thousands) i out reserve for final purchase / power debt payment ELECTRIC (Version 1) FY09 FYI FYI FYI FYI FYI FYI FYI FYI FYI FYI FY20 Operating Cash Flow Operating revenue $22,450 $23,083 $24,068 $23,994 $24,18 $24,426 $24,674 $24,925 $25,179 $25,436 $25,696 $ 25,959 I� Operating expenses (17,617) (18,234) (18,911) (20,203) (21, 11) (22,289) (23,165) (24,076) (25,025) (26,012) (27,040) (28,109) I Other revenue/(expenses) (663) (218) (417) (58) / 148 174 203 213 202 172 119 39 Net Income $ 4,170 $ 4,631 $ 4,740 $ 3,733 02,817 $ 2,311 $ 1,712 $ 1,062 $ 356 $ (404) $ (1,225) $ (2,111) Transfers from/(to)funds (389) (396) (420) 1,373 (436) (445) (455) (465) (475) (486) (496) (507) Debt principle payments (2,795) (2,885) (2,992) (3,340) (47) - - - - - - - Rate-funded capital projects (856) (1,350) (1,328) (1,299) (1,511) (899) (923) (948) (873) (899) (926) (954) Change in Cash $ 130 $ - $ - $ 467 $ 823 $ 967 $ 334 $ (351) $ (992) $ (1,789) $ (2,647) $ (3,572) }F{ d jCash & Reserve Balances Operating Cash Balance $ 4,496 $ 4,496 $ 4,496 $ 4,963 $ 5,785 $ 6,751 $ 7,084 $ 6,733 $ 5,741 $ 3,953 $ 1,305 $ (2,267) Operating Reserve Balance 1,988 2,427 2,902 3,425 3,966 4,528 5,111 5,716 6,344 6,995 7,671 8,371 Capital Reserve Balance 161 188 170 253 98 205 124 266 160 209 265 329 I Cash & Reserve Balances $ 6,645 $ 7,111 $ 7,568 $ 8,641 $ 9,849 $11,484 $12,319 $12,715 $12,245 $11,157 $ 9,241 $ 6,433 (2009 goal is $11 million) Debt service coverage 1.45 1.39 1.50 1.20 (1.20 required) Proposed rate increase 0.00% 3.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Rate-funded Capital $ 1,328 $ 1,299 $ 1,511 $ 899 $ 923 $ 948 $ 873 $ 899 $ 926 $ 954 Purchased Power Cost Factor 9.00% 8.00% 3.00% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% Growth Factor 0.50% 0.75% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Truckee Donner Public Utility District This summary DOES Financial Master Plan Summary / Includes a$1.8 million transfer NOT include the FY09 through h FY20 from the purchase power buy- proposed 2011 electric ' out reserve for final purchase rate increase of 3% (in thousands) power debt payment i ELECTRIC (Version 2) FY09 FYI FYI FYI FYI %FYI FYI FYI FYI FYI FYI FY20 Operating Cash Flow Operating revenue $22,450 $23,083 $23,401 $23,328 $23,58 $23,747 $23,989 $24,234 $24,481 $24,731 $24,983 $ 25,239 Operating expenses (17,617) (18,234) (18,911) (20,203) (21,�511) (22,289) (23,165) (24,076) (25,025) (26,012) (27,040) (28,109) Other revenue/(expenses) (663) (218) (417) (78) %107 112 120 107 73 19 (60) (166) Net Income $ 4,170 $ 4,631 $ 4,073 $ 3,047 �$ 2,104 $ 1,570 $ 944 $ 265 $ (471) $ (1,262) $ (2,117) $ (3,036) Transfers from/(to)funds (389) (396) (420) 1,386 (422) (432) (441) (451) (461) (472) (482) (493) Debt principle payments (2,795) (2,885) (2,992) (3,340) (47) - - - - - - - Rate-funded capital projects (856) (1,350) (1,328) (1,299) (1,511) (899) (923) (948) (873) (899) (926) (954) Change in Cash $ 130 $ - $ (667) $ (206) $ 124 $ 239 $ (420) $ (1,134) $ (1,805) $ (2,633) $ (3,525) $ (4,483) Cash &Reserve Balances Operating Cash Balance $ 4,496 $ 4,496 $ 3,829 $ 3,623 $ 3,747 $ 3,987 $ 3,567 $ 2,432 $ 626 $ (2,007) $ (5,532) $ (10,015) Operating Reserve Balance 1,988 2,427 2,902 3,411 3,939 4,486 5,055 5,644 6,256 6,890 7,548 8,230 Capital Reserve Balance 161 188 170 253 98 205 124 266 160 209 265 329 Cash & Reserve Balances $ 6,645 $ 7,111 $ 6,901 $ 7,287 $ 7,784 $ 8,678 $ 8,746 $ 8,342 $ 7,042 $ 5,092 $ 2,281 $ (1,456) (2009 goal is$11 million) Debt service coverage 1.45 1.39 1.31 1.00 (1.20 required) Proposed rate increase 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% - 1 2 12 1 Rate funded Capital $ ,3 8 $ 99 $ 1,5 1 $ 899 $ 923 $ 948 $ 873 $ 899 $ 926 $ 954 e Purchased Power Cost Factor 9.00% 8.00% 3.00% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% Growth Factor 0.50% 0.75% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Truckee Donner Public Utility District Financial Master Plan Summary FY09 through FY20 (in thousands) WATER FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Operating Cash Flow Operating revenue $11,096 $11,265. $11,438 $11,714 $12,007 $11,544 $11,874 $12,043 $12,376 $12,737 $13,109 $ 13,492 Operating expenses (6,835) (7,003) (7,370) (7,530) (7,721) (7,921) (8,127) (8,338) (8,556) (8,780) (9,010) (9,247) f Other revenue and expenses (806) (759) (787) (713) (678) (665) (645) (606) (568) (527) (484) (431) Net income $ 3,455 $ 3,503 $ 3,281 $ 3,471 $ 3,608 $ 2,958 $ 3,102 $ 3,099 $ 3,252 $ 3,430 $ 3,615 $ 3,814 Transfers from/(to)funds (1,858) (2,415) (2,144) (1,941) (1,328) (430) (312) (26) 119 34 (101) (137) Debt principle payments (834) (852) (853) (890) (923) (961) (1,001) (1,034) (1,074) (1,113) (1,160) (1,210) Rate-funded capital projects (500) (237) (286) (640) (2,076) (2,118) (2,181) (2,246) (2,314) (2,383) (2,455) (2,528) Change in Cash $ 263 $ (1) $ (2) $ - $ (719) $ (551) $ (392) $ (207) $ (17) $ (32) $ (101) $ (61) i Cash & Reserve Balances Operating Cash Balance $ 1,222 $ 1,222 $ 1,222 $ 1,223 $ 505 $ (46) $ (436) $ (642) $ (658) $ (690) $ (790) $ (851) Operating Reserve Balance 1,373 1,983 2,621 3,018 3,044 3,089 3,156 3,226 3,308 3,395 3,506 3,664 Capital Reserve Balance 4,357 4,378 3,528 3,816 4,646 4,940 5,134 5,236 5,147 5,253 5,410 5,290 Cash & Reserve Balances $ 6,952 $ 7,583 $ 7,371 $ 8,057 $ 8,195 $ 7,983 $ 7,854 $ 7,820 $ 7,797 $ 7,958 $ 8,126 $ 8,103 i (2009 goal is $7 million) Debt service coverage 1.79 1.79 1.97 2.16 1.70 1.76 1.80 1.79 1.84 2.17 2.22 2.29 (1.25 required) Proposed rate increase 1.75% 1.75% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Rate-funded Capital $ 640 $ 2,076 $ 2,118 $ 2,181 $ 2,246 $ 2,314 $ 2,383 $ 2,455 $ 2,528