finance & insurance committee item 8a & 8b february 8, 2016 workshop 1_february...

F&I Committee January 11, 2016 Item 6-c, page 1

Finance & Insurance Committee Item 8a & 8b February 8, 2016

February 8, 2016 8a & 8b, page 2 F&I Committee

Overview

Major Expenditures

Reserves

Ten-Year Financial Forecast

SDCWA exchange agreement set-aside

Next Steps


Adopt a two-year budget, covering fiscal years 2016/17 and 2017/18

Adopt rates and charges for calendar years 2017 and 2018

Update ten-year forecast, including the biennial period • Water Sales

• Expenditures

• Revenues


Maintain AAA/AA+/Aa1 ratings

Achieve/Maintain coverage ratios • Debt service coverage = 2.0

• Fixed charge coverage = 1.2

PAYGO funding • 60 percent per year

• Integral to maintaining coverage targets

• Provides financial flexibility


3.4

%

5.8

%

14.3

%

19.7

%

7.5

%

7.5

%

5.0

%

5.0

%

1.5

%

1.5

%

4.0

%

4.0

%

0%

5%

10%

15%

20%

Avera

ge R

ate

In

cre

as

e

Calendar Year


Fiscal Year Ending 2017 2018

Overall increase January 2017 & 2018 4.0% 4.0%

Total Water Sales and Exchanges 1.70 MAF 1.70 MAF

State Water Project Allocation 50% 50%

Colorado River Aqueduct Diversions 1.01 MAF 1.04 MAF

Capital Investment Plan $200 M $200 M

PAYGO $120M $120M


0

100

200

300

400

500

600

700

2015 2016 2017 2018

Millio

n D

oll

ars

Fiscal Year Ending

Unrestricted Reserve Target Reserve Minimum Reserve

Overall Rate Inc. 1.5% 1.5% 4.0% 4.0%

Sales, MAF 1.90 1.63 1.70 1.70

Rev. Bond Cvg 2.7 1.5 1.6 1.6

Fixed Chg Cvg 2.4 1.3 1.3 1.3

PAYGO, $M 210 99 120 120


Rate Type

2016

Approved

2017

Estimated

% Increase

(Decrease)

2018

Estimated

% Increase

(Decrease) Full Service Untreated Volumetric Cost ($/AF)

Tier 1 $594 $666 12.1% $695 4.4%

Tier 2 $728 $760 4.4% $781 2.8%

Treatment Surcharge* $348 $313 (10.1%) $320 2.2%

Full Service Treated Volumetric Cost ($/AF)*

Tier 1 $942 $979 3.9% $1,015 3.7%

Tier 2 $1,076 $1,073 (0.3%) $1,101 2.6%

RTS Charge ($M) $153 $135 (11.8%) $140 3.7%

Capacity Charge ($M) $43 $34 (21.5%) $37 8.8%

*A proposal will be presented to the Board for consideration to address fixed cost recovery of Treatment costs which are currently only recovered through a volumetric rate.


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

2015/16Budget

2016/17Proposed

2017/18Proposed

Billio

n D

oll

ars

Other

CC

RTS

Taxes

Treatment SurchargeRevenueWater SalesRevenue (less TS)


2.4

3

2.0

7

2.1

1

2.3

5

2.2

6

2.1

5

1.7

7

1.6

0

1.7

0

1.8

5

2.0

6

1.9

0

0.0

0.5

1.0

1.5

2.0

2.5

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Millio

n A

cre

-Fe

et

Fiscal Year Ending

Actual SalesLong Term Average SalesProjection

* Includes Exchange


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

2015/16Budget

2016/17Proposed

2017/18Proposed

Bil

lio

n D

oll

ars

Demand Management Supply Programs Colorado River Power O&M State Water Contract Capital Financing


$0

$100

$200

$300

$400

$500

$600

$700

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs

Power

MinimumOMP&R

CapitalCharges


$0

$20

$40

$60

$80

$100

$120

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs

Tax collected to fund SWC costs

Tax collected for GO and Burns Porter bonds


$0

$10

$20

$30

$40

$50

$60

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs


$0

$10

$20

$30

$40

$50

$60

$70

$80

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs

Future SupplyActions

LocalResourcesProgram

ConservationCreditsProgram


$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs


$0

$50

$100

$150

$200

$250

$300

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs

Bonds

R&R Fund

PAYGO


$0

$50

$100

$150

$200

$250

$300

$350

$400

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs

RevenueBond

MWD GOBond


$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs

Operating Equipment Other Materials & Supplies Outside Services Chemicals, Solids, and Power Salaries & Benefits


$267 M

$28 M

$44 M

$26 M $46 M

$8 M

FY 2015/16 - $419 M

Salary & Benefits Variable Treatment Outside ServicesMaterials & Supplies Other Operating Equipment

$262M

$24 M

$42 M

$26 M $58 M

$6 M

FY 2016/17 - $418 M


$262 M

$24 M

$42 M

$26 M $58 M

$6 M

FY 2016/17 - $418 M

Salary & Benefits Variable Treatment Outside ServicesMaterials & Supplies Other Operating Equipment

$266 M

$25 M

$38 M

$25 M $59 M

$6 M

FY 2017/18 - $420 M


2015/16 2016/17 2017/18

Regular 1,885 1,886 1,886

Temporary 20 26 24

Authorized Positions 1,905 1,912 1,910

Unfunded positions/vacancy (56) (72) (69)

Total Funded Positions 1,849 1,840 1,841


$0

$100

$200

$300

$400

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs

Other Materials & Supplies

Non Professional Services/Security Professional Services

Benefits Salaries


$16 M

$199 M

$16 M

$33 M

$53 M

$5 M

$12 M

$9 M

$18 M

FY 2016/17 - $361 M

Office of the General Manager Water System OperationsWater Resource Management Engineering ServicesBusiness Technology Real Property Development & MgmtHuman Resources Office of the Chief Financial OfficerExternal Affairs


$172 M

$102 M $15 M

$22 M

$26 M $29 M

FY 2015/16 - $366 M

Salaries Benefits

Professional Services Non Professional Services/Security

Materials & Supplies Other

$167 M

$103 M

$17 M

$20 M

$26 M $28 M

FY 2016/17 - $361 M

1,785 FTEs 1,795 FTEs


$167 M

$103 M

$17 M

$20 M

$26 M $28 M

FY 2016/17 - $361 M

Salaries Benefits

Professional Services Non Professional Services/Security

Materials & Supplies Other

$168 M

$105 M

$13 M

$21 M

$25 M $28 M

FY 2017/18 - $361 M

1,786 FTEs 1,785 FTEs


$0

$2

$4

$6

$8

$10

$12

$14

$16

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs

Salaries Benefits Professional Services Other


$5.7 M

$3.5 M

$3.6 M

$0.4 M

FY 2015/16 - $13.2 M


$5.8 M

$3.6 M

$3.6 M

$0.4 M

FY 2016/17 - $13.4 M

38 FTEs 38 FTEs


$5.8 M

$3.6 M

$3.6 M

$0.4 M

FY 2016/17 - $13.4 M


$5.8 M

$3.7 M

$3.6 M

$0.4 M

FY 2017/18 - $13.6 M

38 FTEs 38 FTEs


$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs



$1.6 M $1.0 M

$0.4 M

$0.1 M

FY 2015/16 - $3.1 M


$1.6 M $1.0 M

$0.4 M

$0.1 M

FY 2016/17 - $3.1 M

12 FTEs 12 FTEs


$1.6 M $1.0 M

$0.4 M

$0.1 M

FY 2016/17 - $3.1 M


$1.6 M $1.0 M

$0.4 M

$0.1 M

FY 2017/18 - $3.1 M

12 FTEs 12 FTEs


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

2015/16Budget

2016/17Proposed

2017/18Proposed

Millio

n D

olla

rs



$0.58 M $0.36 M

$0.10 M $0.04 M

FY 2015/16- $1.1M


$0.73 M $0.47 M

$0.09 M $0.06 M

FY 2016/17 - $1.3M

5 FTES 4 FTES


$0.73 M $0.47 M

$0.09 M $0.06 M

FY 2016/17 - $1.3M


$0.73 M $0.47 M

$0.09 M $0.06 M

FY 2017/18 - $1.3M

5 FTES 5 FTES


95.4 98.7 107.0

94.1

63.6 67.7 75.1 71.0 75.1 78.7

0

20

40

60

80

100

1202

00

5

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Valuation Date (June 30)

Pe

rce

nta

ge %


11.4 11.7 11.8

14.5 15.0 16.3

17.6 19.7 20.7

22.7

0

5

10

15

20

252

00

9

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

*

Fiscal Year Ending

Pe

rce

nta

ge %

*Projected


$30 $32 $34 $36 $37 $36

$40 $41

$47 $47

05

101520253035404550

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Fiscal Year Ending

Mill

ion

Do

llars


April 2013 • Modified policy for “smoothing” investment

returns. Effective fiscal 2015/16.

February 2014 • Modified demographic assumptions. Effective

2016/17.

November 2015 • Established mechanism for reducing the discount

rate. Will be implemented over 21 years.


43.8

51.4 56.5

0

10

20

30

40

50

60

06/30/14 06/30/15 12/31/15

Pe

rce

nta

ge %


31 30 31 34

37

49 53

40

29

23

0

10

20

30

40

50

60

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Fiscal Year Ending

Mill

ion

Do

llars


0.0

0.5

1.0

1.5

2.0

2.5

3.0

199

01991

199

21

99

31

99

41

99

51

99

61

99

71998

199

92

00

02

00

12

00

22

00

32

00

42

00

52006

200

72

00

82

00

92

01

02

01

12

01

22

01

32014

201

5

Millio

n A

cre

-Fe

et

Fiscal Year Ending

Actual Sales

Average Sales (1990-2015)


Res

erve

Lev

el

Used to maintain stable rates and charges

Used for PAYGO, Defeasance, etc

Increase Rates and Charges to replenish reserves

Reserve Fund Principle: Provide stable & predictable water rates


Volumetric Water Sales Revenue

Variable Costs

Fixed Costs Recovered by Water Rate 20%

17.5%

time

2.5%

time

time

$

$

$


2017/18 Budget

2018/19 Forecast

2019/20 Forecast

2020/21 Forecast

Revenue Requirement $ 1,574 $ 1,641 $ 1,716 $ 1,788 Less RTS Charge 138 142 146 152 Less Capacity Charge 35 37 39 40

Water Rate Revenue Requirements $ 1,402 $ 1,463 $ 1,532 $ 1,596 Less Variable Costs Treatment Surcharge Rev Req. 265 265 263 260 SWC Variable Power Costs 153 168 189 209 CRA Power Costs 54 65 70 74

Fixed Costs Recovered by Water Rate 930 965 1,010 1,053

Percent Reserved 17.5% 17.5% 17.5% 17.5%

Annual Amount Reserved $ 163 $ 169 $ 177 $ 184

Minimum Reserve Level = 163 + 169 /2 = $247.2 million

Target Reserve Level = 163 + 169 + 177 + 184/2 = $600.6 million


0

100

200

300

400

500

600

700

800

900

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Mil

lio

n D

oll

ars

Fiscal Year Ending

Unrestricted Reserve* Target Reserve Minimum Reserve

* Revenue Remainder & WRSF

Overall Rate Inc. 1.5% 1.5% 4.0% 4.0% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%

Sales, MAF 1.90 1.63 1.70 1.70 1.75 1.75 1.75 1.75 1.80 1.80 1.80 1.80

Rev. Bond Cvg 2.7 1.5 1.6 1.6 1.7 1.8 1.9 2.0 2.3 2.4 2.6 2.7

Fixed Chg Cvg 2.4 1.3 1.3 1.3 1.4 1.4 1.4 1.4 1.5 1.5 1.5 1.5

PAYGO, $M 210 99 120 120 120 120 120 123 127 130 133 137


2.4

3

2.0

7

2.1

1

2.3

5

2.2

6

2.1

5

1.7

7

1.6

0

1.7

0

1.8

5

2.0

6

1.9

0

0.0

0.5

1.0

1.5

2.0

2.5

200

4

200

5

2006

200

7

200

8

200

9

201

0

201

1

201

2

2013

201

4

201

5

201

6

201

7

201

8

201

9

202

0

2021

202

2

202

3

202

4

202

5

202

6

Millio

n A

cre

-Fe

et

Fiscal Year Ending

Actual SalesLong Term Average SalesProjection

* Includes Exchange


59

4

666

69

5

73

8

78

3

83

5

87

6

91

7

96

1

1,0

08

1,0

56

34

8

313

32

0

31

5

30

9

28

8

28

8

28

8

28

8

28

8

28

8

942

979

1,0

15

1,0

53

1,0

92

1,1

23

1,1

64

1,2

05

1,2

49

1,2

96

1,3

44

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

201

6

201

7

201

8

2019

2020

202

1

202

2

202

3

202

4

202

5

202

6

Do

lla

rs p

er

AF

Calendar Year

Treatment Surcharge

Full Service Untreated Tier 1


$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

201

7

2018

2019

202

0

202

1

202

2

202

3

202

4

202

5

202

6

Bil

lio

n D

oll

ars

Fiscal Year Ending

Other

Capacity Charge

Readiness-to-Serve

Taxes

TreatmentSurcharge Revenue

Water SalesRevenue (less TS)


$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

201

7

201

8

2019

2020

2021

202

2

202

3

202

4

202

5

202

6

Bil

lio

n D

oll

ars

Fiscal Year Ending

Colorado RiverPower

DemandManagement

SupplyPrograms

O&M

State WaterContract

CapitalFinancing


$0

$200

$400

$600

$800

$1,000

$1,200

201

7

201

8

201

9

202

0

202

1

202

2

202

3

202

4

202

5

202

6

Millio

n D

olla

rs

Fiscal Year Ending

Power

Water FixCosts

RemainingFixed Costs


27 32 38 38 38 38 38 38 38 38

44 42

42 45 45 45 45 45 45 45

4 2 2 2 2 2 2 2 2 2

$0

$10

$20

$30

$40

$50

$60

$70

$80

$902

01

7

20

18

20

19

20

20

20

21

2022

2023

2024

2025

20

26

Millio

n D

oll

ars

Fiscal Year Ending

Future SupplyActions

LocalResourcesProgram

ConservationCreditsProgram


20

0

20

0

20

0

20

0

20

0

20

5

211

21

7

22

2

22

8

$0

$50

$100

$150

$200

$250

$3002

01

7

201

8

201

9

202

0

202

1

202

2

2023

2024

2025

2026

Millio

n D

oll

ars

Fiscal Year Ending

Bonds

PAYGO


$0

$50

$100

$150

$200

$250

$300

$350

$4002

01

7

201

8

201

9

202

0

202

1

202

2

2023

2024

2025

2026

Millio

n D

oll

ars

Fiscal Year Ending

RevenueBond

MWD GOBonds


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

201

6

201

7

2018

201

9

202

0

Bil

lio

n D

oll

ars

Fiscal Year Ending

Reserve Funds*

Rate Stabilization Funds**

Exchange Agreement Set-aside

Other (operating, debtservice, construction andtrust funds)

* Includes Water Rate Stabilization Fund and Revenue Remainder Fund ** Includes Water Stewardship Fund and Treatment Surcharge Stabilization Fund


February 9, 2016 Board Action, set public hearings

February 23, 2016 Workshop #2

February 26, 2016 Notice to Legislature

March 7, 2016 F&I Committee, Workshop #3

March 8, 2016 Public Hearings

March 22, 2016 Workshop #4

April 11, 2016 F&I Committee, Approve Biennial Budget and Water Rates and Charges

April 12, 2016 Board, Approve Biennial Budget and Water Rates and Charges

finance & insurance committee item 8a & 8b february 8, 2016 workshop 1_february...

Documents