Finance & Insurance Committee Item 8a & 8b February 8, 2016 Workshop 1_February 8_FINAL.pdfF&I...
Transcript of Finance & Insurance Committee Item 8a & 8b February 8, 2016 Workshop 1_February 8_FINAL.pdfF&I...
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
February 8, 2016 8a & 8b, page 3 F&I Committee
February 8, 2016 8a & 8b, page 4 F&I Committee
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
February 8, 2016 8a & 8b, page 5 F&I Committee
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
February 8, 2016 8a & 8b, page 6 F&I Committee
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
February 8, 2016 8a & 8b, page 7 F&I Committee
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
February 8, 2016 8a & 8b, page 8 F&I Committee
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, $M 210 99 120 120
February 8, 2016 8a & 8b, page 9 F&I Committee
Rate Type
2016
Approved
2017
Estimated
% Increase
(Decrease)
2018
Estimated
% Increase
(Decrease) Full Service Untreated Volumetric Cost ($/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.
February 8, 2016 8a & 8b, page 10 F&I Committee
$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)
February 8, 2016 8a & 8b, page 11 F&I Committee
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
February 8, 2016 8a & 8b, page 12 F&I Committee
$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
February 8, 2016 8a & 8b, page 13 F&I Committee
$0
$100
$200
$300
$400
$500
$600
$700
2015/16Budget
2016/17Proposed
2017/18Proposed
Millio
n D
olla
rs
Power
MinimumOMP&R
CapitalCharges
February 8, 2016 8a & 8b, page 14 F&I Committee
$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
February 8, 2016 8a & 8b, page 15 F&I Committee
$0
$10
$20
$30
$40
$50
$60
2015/16Budget
2016/17Proposed
2017/18Proposed
Millio
n D
olla
rs
February 8, 2016 8a & 8b, page 16 F&I Committee
$0
$10
$20
$30
$40
$50
$60
$70
$80
2015/16Budget
2016/17Proposed
2017/18Proposed
Millio
n D
olla
rs
Future SupplyActions
LocalResourcesProgram
ConservationCreditsProgram
February 8, 2016 8a & 8b, page 17 F&I Committee
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2015/16Budget
2016/17Proposed
2017/18Proposed
Millio
n D
olla
rs
February 8, 2016 8a & 8b, page 18 F&I Committee
$0
$50
$100
$150
$200
$250
$300
2015/16Budget
2016/17Proposed
2017/18Proposed
Millio
n D
olla
rs
Bonds
R&R Fund
PAYGO
February 8, 2016 8a & 8b, page 19 F&I Committee
$0
$50
$100
$150
$200
$250
$300
$350
$400
2015/16Budget
2016/17Proposed
2017/18Proposed
Millio
n D
olla
rs
RevenueBond
MWD GOBond
February 8, 2016 8a & 8b, page 20 F&I Committee
February 8, 2016 8a & 8b, page 21 F&I Committee
$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
February 8, 2016 8a & 8b, page 22 F&I Committee
$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
February 8, 2016 8a & 8b, page 23 F&I Committee
$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
February 8, 2016 8a & 8b, page 24 F&I Committee
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
February 8, 2016 8a & 8b, page 25 F&I Committee
February 8, 2016 8a & 8b, page 26 F&I Committee
$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
February 8, 2016 8a & 8b, page 27 F&I Committee
$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
February 8, 2016 8a & 8b, page 28 F&I Committee
$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
February 8, 2016 8a & 8b, page 29 F&I Committee
$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
February 8, 2016 8a & 8b, page 30 F&I Committee
February 8, 2016 8a & 8b, page 31 F&I Committee
$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
February 8, 2016 8a & 8b, page 32 F&I Committee
$5.7 M
$3.5 M
$3.6 M
$0.4 M
FY 2015/16 - $13.2 M
Salaries Benefits Professional Services Other
$5.8 M
$3.6 M
$3.6 M
$0.4 M
FY 2016/17 - $13.4 M
38 FTEs 38 FTEs
February 8, 2016 8a & 8b, page 33 F&I Committee
$5.8 M
$3.6 M
$3.6 M
$0.4 M
FY 2016/17 - $13.4 M
Salaries Benefits Professional Services Other
$5.8 M
$3.7 M
$3.6 M
$0.4 M
FY 2017/18 - $13.6 M
38 FTEs 38 FTEs
February 8, 2016 8a & 8b, page 34 F&I Committee
February 8, 2016 8a & 8b, page 35 F&I Committee
$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
Salaries Benefits Professional Services Other
February 8, 2016 8a & 8b, page 36 F&I Committee
$1.6 M $1.0 M
$0.4 M
$0.1 M
FY 2015/16 - $3.1 M
Salaries Benefits Professional Services Other
$1.6 M $1.0 M
$0.4 M
$0.1 M
FY 2016/17 - $3.1 M
12 FTEs 12 FTEs
February 8, 2016 8a & 8b, page 37 F&I Committee
$1.6 M $1.0 M
$0.4 M
$0.1 M
FY 2016/17 - $3.1 M
Salaries Benefits Professional Services Other
$1.6 M $1.0 M
$0.4 M
$0.1 M
FY 2017/18 - $3.1 M
12 FTEs 12 FTEs
February 8, 2016 8a & 8b, page 38 F&I Committee
February 8, 2016 8a & 8b, page 39 F&I Committee
$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
Salaries Benefits Professional Services Other
February 8, 2016 8a & 8b, page 40 F&I Committee
$0.58 M $0.36 M
$0.10 M $0.04 M
FY 2015/16- $1.1M
Salaries Benefits Professional Services Other
$0.73 M $0.47 M
$0.09 M $0.06 M
FY 2016/17 - $1.3M
5 FTES 4 FTES
February 8, 2016 8a & 8b, page 41 F&I Committee
$0.73 M $0.47 M
$0.09 M $0.06 M
FY 2016/17 - $1.3M
Salaries Benefits Professional Services Other
$0.73 M $0.47 M
$0.09 M $0.06 M
FY 2017/18 - $1.3M
5 FTES 5 FTES
February 8, 2016 8a & 8b, page 42 F&I Committee
February 8, 2016 8a & 8b, page 43 F&I Committee
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 %
February 8, 2016 8a & 8b, page 44 F&I Committee
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
February 8, 2016 8a & 8b, page 45 F&I Committee
$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
February 8, 2016 8a & 8b, page 46 F&I Committee
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.
February 8, 2016 8a & 8b, page 47 F&I Committee
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 %
February 8, 2016 8a & 8b, page 48 F&I Committee
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
February 8, 2016 8a & 8b, page 49 F&I Committee
February 8, 2016 8a & 8b, page 50 F&I Committee
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)
February 8, 2016 8a & 8b, page 51 F&I Committee
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
February 8, 2016 8a & 8b, page 52 F&I Committee
Volumetric Water Sales Revenue
Variable Costs
Fixed Costs Recovered by Water Rate 20%
17.5%
time
2.5%
time
time
$
$
$
February 8, 2016 8a & 8b, page 53 F&I Committee
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
February 8, 2016 8a & 8b, page 54 F&I Committee
February 8, 2016 8a & 8b, page 55 F&I Committee
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
February 8, 2016 8a & 8b, page 56 F&I Committee
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
February 8, 2016 8a & 8b, page 57 F&I Committee
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
February 8, 2016 8a & 8b, page 58 F&I Committee
$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)
February 8, 2016 8a & 8b, page 59 F&I Committee
$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
February 8, 2016 8a & 8b, page 60 F&I Committee
$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
February 8, 2016 8a & 8b, page 61 F&I Committee
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
February 8, 2016 8a & 8b, page 62 F&I Committee
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
February 8, 2016 8a & 8b, page 63 F&I Committee
$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
February 8, 2016 8a & 8b, page 64 F&I Committee
February 8, 2016 8a & 8b, page 65 F&I Committee
$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 8, 2016 8a & 8b, page 66 F&I Committee
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
February 8, 2016 8a & 8b, page 67 F&I Committee