CONTACT: Ted Cooke Doug Dunlap (623) (623)

Transcription

1 FAP Agenda Number 3. CONTACT: Ted Cooke Doug Dunlap (623) (623) MEETING DATE: October 15, 2015 AGENDA ITEM: Discussion and Consideration of Action to Recommend that the Board Approve the Proposed CAP Biennial Budget for Calendar Years 2016 and 2017 RELEVANT POLICY, STATUTE OR GUIDING PRINCIPLE: 2010 CAWCD Board of Directors Strategic Plan o Finance: Maintaining CAP's Financial Health o Project Reliability: Effectively Operate and Maintain CAP Assets STAFF RECOMMENDATION: The District s biennial budget for 2016 and 2017 was previously provided to the Board. Staff is proposing that the Finance, Audit, and Power Committee recommend that: (a) The Proposed 2016 and 2017 Budget be submitted for approval to the Board of Directors; and (b) The Board of Directors delegate to the General Manager authority to execute the approved operating and capital budget within parameters set by the Board. BUDGET IMPLICATIONS: Are budget funds required? Yes X No Amount: (Dollars in Millions) Total Revenues $327.3 $386.6 Total Expenses $285.6 $293.4 Capital Expenditures $ 45.2 $ 46.6

2 PREVIOUS BOARD ACTION/ACTIVITY: The Finance, Audit, and Power Committee reviews the Proposed Budget biennially at its October meeting (odd-numbered years) and makes a recommendation to the Board for approval. The Board reviews the Committee s Recommended Budget biennially at its November meeting (odd-numbered years) and issues an Approved Budget. The Board will be asked to approve the Budget at either its November 2015 or December 2015 meetings. In November 2016, the Board may review and consider for approval an amendment to the 2017 budget for items that have significantly changed and will cause budgetary control parameters to be exceeded. June 4, 2015 The Board approved changing the 2016 Provisional Rates to Firm June 4, 2015 The Board established the 2015/2016 ad valorem tax rate at $0.10 per $100 assessed valuation June 4, 2015 The Board established the 2015/2016 water storage tax rate at $0.04 per $100 assessed valuation October 1, 2015 An overview of the Biennial Budget was presented to the Board and the Board received the Proposed Biennial Budget ISSUE SUMMARY/DESCRIPTION: The proposed biennial budget for was provided to the Committee and posted on the District's website. All of the financial information contained in the Budget, whether it is summary information, revenues, expenses, staffing, fund detail or group/department information, is presented using a five-year comparison: 2013 and 2014 actual data, the 2015 projection and the 2016 and 2017 budget. If other analyses are needed or you have questions, please contact Doug Dunlap at (623) Although the Budget is a comprehensive document, some summary information is presented below. Revenues (Millions) 2015 Projection 2016 Budget 2017 Budget 16 vs 15 Incr/ (Decr) 17 vs 16 Incr/ (Decr) Water O&M Charges $ $ $ $ 12.9 $ 13.8 Capital Charges Power & Other BDF Property Taxes Interest Income (0.2) Other Revenues Total Revenues $ $ $ $ 22.9 $ 59.3 Water Deliveries and Water O&M Charges (Revenues) Water deliveries in 2016 and 2017 are budgeted at 1.52 million and 1.54 million acre-feet, respectively. This is net of the 80 thousand acre-feet reduction from the Ag forbearance program in Associated water O&M charges are expected to be $12.9 million higher in 2015 and $13.8 million higher in 2015, mainly as a result of a higher energy rate.

3 Capital Charges The 2017 increase of $32.7 million is mainly associated with back capital charges from the Non-Indian Ag reallocation. Power and Basin Development Fund (BDF) Revenues Power and BDF revenues are projected to be fairly flat in 2016 and 2017 as compared to The energy market is anticipated to remain in a depressed state during the budget period, driving significant losses on surplus power sales. Property Taxes The 2016 and 2017 budget reflects maintaining the general ad valorem tax at $0.10 per $100 of assessed valuation and the water storage tax rate at $0.04 per $100 of assessed valuation. The increases are a result of the continuing turnaround in property values and a decrease in the amount transferred to the Arizona Water Bank Authority (AWBA) for long-term storage credit purchases. AWBA transferred amounts are budgeted as $6.1 million in 2015, $4.0 million in 2016 and $0.1 million in 2017 based on the AWBA annual report. Interest/Gain (Loss) Income The interest income is primarily from investments held by the Arizona State Treasurer. The 2017 budget includes $15.4 million in interest on the NIA back capital charges offset by a $17.4 million write down on the NIA asset from the reallocation. Expenses The General Manager directed staff to make every effort to maintain a flat budget on non-labor controllable expenses from the 2015 budget as well as a flat headcount (FTE). An exception was made for periodic or variable cost programs (e.g. MSCP, Extraordinary Maintenance projects, Board elections, etc.). Both directives were met while ensuring that all essential work was included in both budget years. There are approximately $6 million of periodic or variable cost programs in each year. (Millions) 2015 Projection 2016 Budget 2017 Budget 16 vs 15 Incr/ (Decr) 17 vs 16 Incr/ (Decr) Pumping Power $ $ $ $ 4.4 $ 4.4 Transmission (0.9) Salaries & Related Costs Amortization & Depreciation Interest Expense (0.8) Other Costs $ $ $ $ 18.3 $ 7.8 Pumping Power Continued increased operating costs per MWH at the Navajo Generating Station(NGS) increase the power cost in each of the budget years. The increased delivery volume also increases energy power, as it is a variable cost, by approximately $2.1 million in 2016 and $1.2 million in Salaries and Related Costs The proposed budget includes average full-time equivalent (FTE) employees for each year. This budgeted FTE level has remained fairly constant since While there were high levels of vacancies in 2015, the 2016 budget

4 anticipates filling those open positions. To adjust for unfilled positions throughout the year, the 2016 and 2017 budget includes a vacancy/salary reduction adjustment of 15 FTEs. Interest Expense This is the interest on the federal repayment obligation and the budgeted $30 million bond issue. Interest will decline each year as the debt is reduced. Capital Budget Capital expenditures for 2016 and 2017 are budgeted at $45.2 million and $46.6 million, respectively. Significant projects include the APS and Hassayampa Tap transmission projects, Building 1 HVAC replacement, the motor exciter and control unit replacement at the pumping plants (beginning of a multi-year system-wide replacement program), and drainage improvements at the Superstition Mountains recharge project. CAWCD continues to rely on the Project Steering Committee to closely review and monitor projects. SUGGESTED MOTION: I move that the Finance, Audit, and Power Committee recommend that: (a) The Proposed 2016 and 2017 Budget presented at the October 15, 2015, meeting be submitted for approval to the Board of Directors. (b) The Board of Directors delegate to the General Manager the authority to execute the approved operating budget and to approve expense variances per budgetary controls as set forth in the budget. (c) The Board of Directors delegate to the General Manager the authority to execute the approved capital budget and to approve budget variances for total capital spending up to 102% of the annual budget.

5 FAP Agenda Number 3. Attachment. Central Arizona Project 2016 / 2017 Budget General Fund Operating Expenses Senior Management Team Doug Dunlap August 20, 2015 Finance, Audit & Power Committee October 15, 2015 Doug Dunlap Manager, Finance & Accounting Key Budget Messages o Recurring non-labor departmental expenses flat from 2015 budget level o Total staff headcount (FTE) flat from 2015 budget level o Programs with a periodic or variable cost (e.g. MSCP, elections) account for approximately $6 million expense each year o Capital expenditures below advisory levels from previous budget and within Big R rates o Budget will meet published firm and advisory water delivery rates o All essential work for is included in the budget o Strategic reserves temporarily under target 2 1

6 Current Assumptions o CAP will deliver (excluding credits): 1,478,209 a/f in ,506,260 a/f in ,522,397 a/f in 2017 o Non-Indian Ag Water allocation finalized during 2017 with first payment due in December 2017 and payments over 5 years; water available for 2018 deliveries o Budget was built up from Department detail o No contingencies built into budget o Average salary increases budgeted for 3% each year o 2016 includes the drought response and shortage preparedness programs that the Board has approved; 2017 includes a similar amount 3 Current Assumptions (CONT.) o $30 million bond issuance in December 2015; 2 nd bond issue not planned during budget period o $10 million CAGRD Bond issuance in December 2016 o Energy Reflects new Environmental costs for Mercury and Air Toxic Standards (MATS), the ASH ruling, and costs associated with the NEPA review process and savings related to refined coal No revenues from Shaping and Displacement Surplus Navajo energy is sold at a significant loss (about $11-$13/MWh under cost), excluding long-term sale agreement with SRP results in higher cash remittance for the federal repayment 4 2

7 All Funds/All Accounts (Thousands) Actual Actual Projection j Budgetg Budgetg Operating Revenues $ 211,714.0 $ 238,785.0 $ 241,771.0 $ 260,384.0 $ 312,541.0 Operating Expenses (216,981.0) (227,416.0) (241,924.0) (259,735.0) (268,332.0) Operating Income/(Loss) $ (5,267.0) $ 11,369.0 $ (153.0) $ $ 44,209.0 Non-operating Revenues 52, , , , ,097.0 Non-operating Expenses (27,261.0) (26,407.0) (25,385.0) (25,865.0) (25,089.0) Total Non-operating Income/(loss) $ 25,199.0 $ 41,314.0 $ 37,265.0 $ 41,006.7 $ 49,008.0 Change in Net Position $ 19,932.0 $ 52,683.0 $ 37,112.0 $ 41,655.7 $ 93, Staffing (Year-End Full Time Equivalents) Actual/Projected FTEs Authorized FTEs o Authorized FTEs from 2013 through 2017 are relatively flat o Due to retirements from aging workforce actual FTEs have been under the authorized amount 6 3

8 General Fund Key Points o Departmental recurring non-labor expenses relatively flat from 2015 budget levels pursuant to GM directive o Programs with periodic or variable cost account for approximately $6 million expense each year in o Pumping power costs stable; transmission increasing slightly o Both the Fixed OM&R and the Energy rate fit within the 2016 firm rate and the 2017 advisory rates 7 Water Deliveries (excluding credit exchanges) Water Deliveries 2017 Budget 2016 Budget 1,522 1, Projection 1, Actual 2013 Actuals 1,526 1, Actuals 2014 Actual 2015 Projection 2016 Budget 2017 Budget M&I Agricultural Water Federal Underground Storage M&I Agricultural Water Federal Underground Storage 8 4

9 General Fund Sources and Uses of Revenues 9 General Fund (Thousands) Actual Actual Projection j Budget g Budget g Water Deliveries (acre-feet in thousands) 1, , , , ,535.0 Operating Revenues Water operations & maintenance charges $ 153,846.7 $ 173,003.6 $ 182,200.2 $ 194,511.9 $ 208,154.1 Water service capital charges 11, , , , ,175.6 Power & Basin Development Fund revenues 28, , , , ,027.0 Reimbursements and other revenues 1, , , , ,438.6 Total Operating Revenues 195, , , , ,795.3 Operating Expenses Salaries and related costs (55,231.1) (56,250.8) (55,404.6) (57,215.6) (60,143.7) Pumping power & capacity charges (90,546.7) (95,086.0) (107,992.0) (112,378.7) (116,807.0) Transmission (6,531.9) (6,071.3) (6,532.3) (8,889.1) (8,000.9) Amortization of permanent service right (23,017.8) (23,017.8) (23,017.8) (23,017.8) (23,017.8) Depreciation (17,288.0) (19,491.2) (20,831.0) (23,363.2) (24,948.2) Other expenses (24,160.6) (24,665.7) (25,057.1) (30,987.2) (30,621.7) Total Operating Expenses (216,776.1) (224,582.8) (238,834.8) (255,851.6) (263,539.3) Operating Income/(Loss) (21,288.3) (4,575.2) (18,804.3) (21,875.4) 19,256.0 Non-operating Revenues/Expenses Property taxes 52, , , , ,603.0 Interest income and other revenues (101.5) 6, , , ,147.7 Interest expense and other expenses (27,260.4) (26,406.7) (25,385.4) (25,864.7) (24,645.7) Total Non-operating Revenues/(Loss) 25, , , , ,105.0 Change in Net Position $ 3, $ 36, $ 18,226.4 $ 18,841.1 $ 68,

10 General Fund Expenses $ Millions Power Transmission Salaries & Amort'n/ related Deprec'n Interest Other 2013: $244.0M : $251.0M : $264.2M : $281.7M : $288.2M General Fund Revenues $ Millions Water O&M Capital Chg Power/BDF Taxes Interest & Other 2013: $247.8M : $287.5M : $282.4M : $300.6M : $356.5M

11 General Fund: Budget Comparison (Thousands) Bud Bud Bud Operating Expense * Departmental Recurring Non Labor Expenses $ 24,426 $ 24,406 $ 24,854 * Salaries and related 57,697 57,216 60,144 * Periodic or variable cost programs 6,581 5,768 Pumping power & Hoover capacity 116, , ,807 Transmission 7,996 8,889 8,001 Amort/deprec 45,955 46,381 47,966 Total Operating Expense $ 252,112 $ 255,851 $ 263,539 * Controllable expenses 2015 budget excludes $1M add'l spending authority for CO River Programs and $550K for bonding. 13 Periodic or Variable Programs in Budget Programs with Periodic or Variable Cost vs vs excluding labor (Thousands) Budget Budget (Incr)/Decr Budget (Incr)/Decr Extraordinary Maintenance Steel Discharge Lines and Recoat Mark Wilmer PP Colorado River Drought Response and Shortage Preparedness Programs Recharge Site Permit Renewals MSCP Board Elections Total $ $ 2,903 $ (2,903) $ 2,833 $ (2,833) 1,833 (1,833) 2,050 (2,050) 200 (200) 150 (150) 2,665 3,400 (735) 3,400 (735) 910 (910) $ 2,665 $ 9,246 $ (6,581) $ 8,433 $ (5,768) 14 7

12 Capital Expenditures (Thousands) Actual Actual Projected Budget Budget Capital Projects $23,799 $25,781 $46,804 $39,390 $43,417 Capital Equipment 2,587 8,589 3,306 5,807 3,133 Total Capital Expenditures $26,386 $34,370 $50,110 $45,197 $46,550 o capital budget at $91.7 million o Spending is consistent with Big R published rates o Capital budget is allocated across forty one projects with approximately two-thirds of spending allotted to ten projects o Capital budget is managed by the Project Steering Committee (PSC) 15 Capital Expenditures Detail Pre Grand CAPITAL PROJECTS (Thousands) 2016 Budget Budget Balance Total APS Transmission Line and Hassayampa Tap Connection $21,685 $4,392 $15,072 $3,951 $45,100 Backup Power System Replacements at Checks, Turnouts and Microwave Sites 194 1,117 1,704 3,024 6,038 Building 1 HVAC Replacement 739 3,958 1, ,147 Condition Based Monitoring 5,148 1,713 1, ,902 Discharge Valve Replacement at Pumping Plants 3,169 1,343 1, ,794 Mark Wilmer Circuit Breakers and Compressed Air System Replacement - 1,031 2,896 5,404 9,331 Motor Exciter and Control Unit Replacement at Pumping Plants 1,433 3,069 3,065 7,352 14,919 Superstition Mtn Recharge Project - Drainage Improvements 147 2, ,835 Transmission Line Rebuild ED2 to Saguaro 5,125 2,170 2,151 1,569 11,015 Trashrake Installation at Mark Wilmer Pumping Plant 3,878 3, ,284 Annunciator Panel Replacement at Pumping Plants 4, ,041 As-Built Pumping Plants Phase 2 17,632 1, ,722 Bridge at Pima Mine Road Recharge Project 1, ,201 Centralized Reliability Information Management System Chlorination System Replacement at 10 Pumping Plants , ,949 Communication Cable Replacement Phase , ,872 Digital Asset Management System Electromechanical Relay Replacement Phase ,511 31,235 33,715 Elevator System Control/Drive Replacement 1,790 1, ,671 Emergency Public Address System 1, ,721 Enterprise Project Management System Implementation Flow Meter Replacement Phase 2 (CCW,QTO,PY,SX2) Hassayampa Access Road Improvements Headquarters Fuel System Replacement ,045 1,356 Hydrology Improvements at Centennial Wash 326 1, , /2017 Budget Review 10/15/

13 Capital Expenditures Detail Pre Grand CAPITAL PROJECTS (Thousands) 2016 Budget Budget Balance Total Industrial Water Treatment at Pumping Plants (BRD, PIC, RED) , ,612 Maintenance Building Enclosures ,142 Projects Under $250,000 IT/Engineering Mini Projects ,312 Reach 11 Dike 1 Fence Relocation Server Room and Multifunction Space 4,955 1, ,701 Siphon Stop Logs at Cunningham, Gila, and Santa Cruz , ,617 South Central Maintenance Facility ,015 South Plants Fire Protection ,628 8,146 Station Service Battery Charger Replacement 1, ,602 Sump Pump Water Level Controls at Pumping Plants ,392 Twin Peaks & Sandario HVAC Replacement ,094 2,207 3,374 UZ1B Switchgear Replacement at Waddell 1, ,210 Waddell Computer Based Control System (CBCS) Replacement Waddell Governor Controls Replacement ,227 1,748 Waddell River Outlet Works (ROW) West Plants Bus Disconnect Switch Replacement (BSH, LHQ, HSY) ,115 TOTAL PROJECT EXPENDITURES $77,108 $39,370 $43,417 $66,004 $225,900 Capital Equipment Purchases - 5,807 3,133-8,940 TOTAL CAPITAL EXPENDITURES $77,108 $45,177 $46,550 $66,004 $234, Capital Projects Overview Agenda o Communication Cable Replacement Phase 5 (610173) o Superstition Mountain Recharge Project Drainage Improvements (610474) o Building 1 HVAC Replacement (610487) o Electromechanical Relay Replacement Phase 1(610494) o Mark Wilmer Circuit Breakers and Compressed Air System Replacement (610499) o Siphon Stop Logs at Cunningham, Gila, and Santa Cruz Siphons (610502) 18 9

14 Communications Cable Replacement, Phase Project Scope o Black Mountain Pumping Plant to Terminus Turn Out (17 miles) o 3 HDPE Conduits o 48 fiber optic cable o 2 of 3 conduits open spares o Tie into Plants, Checks Structures, & Turnouts o Pascua Yaqui & San Xavier Indian Communities Plow Train Headed South on Canal Right u/s of Picacho 19 Communications Cable Replacement, Phase

15 Communications Cable Replacement, Phase Project Schedule & Budget o January 2016 January 2018 o $1.872 Million Fiber Cable Figure 8 Install Method Pull Box Installation 21 Superstition Mountain Recharge Drainage Improvements Project Scope o Severe erosion since construction in 2011 from wave action & storm runoff o Silt traps, swales, and toes of slope o Soil cement concept o Maintain infiltration rates & reduce maintenance outages Runoff Erosion up to 4 Deep Let s Save Al! 22 11

16 Superstition Mountain Recharge Drainage Improvements Basin 1 Basin 2 SMRP Looking North Erosion at Toe of Slope 23 Superstition Mountain Recharge Drainage Improvements Project Schedule & Budget o April 2015 November 2017 o $2.835 Million Basin 2 Plugging Layer Basin 2 Northwest Corner Soil Accumulation Typical Slope Erosion 12

17 Building 1 HVAC Replacement Project History o CAP HQ constructed in 1985 o Cools & Heats 48,000 square foot building o In last 2 years we ve seen number of correctives and breakdowns more than double Project Scope o Replace existing HVAC system, carpeting, and repaint interior building o Phase 1 (Wet) o Replace Chiller, Cooling Tower, Pumps and Piping o Extend Existing Mechanical yard Current Condition of Existing Piping 25 Building 1 HVAC Replacement B1 North Wall Mechanical Equipment Yard Existing Cooling Tower & Backup Generator 26 13

18 Building 1 HVAC Replacement Project Scope o Phase 2 (Dry) o Replace air handlers, ductwork, and variable air volume flow control o Replace outdated carpet & painting o Requires employee relocation o Moving Plan development o 4 zones o 6-8 wks per zone o 60 cubicle modular work space Project Schedule & Budget o Phase 1 January to March 2016 o Phase 2 October 2016 to April 2017 o $6.1 Million 27 Electromechanical Relay Replacement Project Scope o Install digital relays to replace electromechanical (EM) relays at all CAP pumping plants o Equipment obsolescence and age put existing relays at risk o Relays are critical for protecting pump motors and electrical transformers o Digital relays provide diagnostic capability, event reports, and data logging New Digital Relay Rear View New Digital Relay Front View 28 14

19 Electromechanical Relay Replacement Phase 1 Project Schedule & Budget o January 2016 April 2018 o $2.670 Million Full Program Schedule & Budget o o $ Million o Dedicated team o Plant availability coordination Existing Electromechanical Relays Typical Electromechanical Relays Removed 29 Mark Wilmer Circuit Breakers and Compressed Air System Replacement Project Scope o Phase 1 - Replace airblast circuit breaker compressed air system o Phase 2 - Replace six existing air-blast breakers with new insulated breakers, 13.8 KV o Phase 3 Relocate compressed air system to Hassayampa Compressed Air System at Mark Wilmer 30 15

20 Mark Wilmer Circuit Breakers and Compressed Air System Replacement New Insulated Breaker Concept Breaker in Open (off) Position for 1 of 3 Phases of Motor Power, 13.8 KV 31 Mark Wilmer Circuit Breakers and Compressed Air System Replacement Project Schedule & Budget o Phase 1: September 2015 July 2016 o Phase 2: October 2015 July 2019 o Phase 3: July 2019 July 2020 o $9.331 Million Working in the Upper Section of Breaker Cubicle to Repair Contact Components 32 16

21 Siphon Stop Logs at Cunningham, Gila, and Santa Cruz Project Scope o Install stop log guides at siphon outlets o Design & construction of stop logs & bubble-logs o Cunningham Wash, Gila River, & Santa Cruz River o Avoid draining the entire pool for siphon maintenance & inspections Cunningham Wash Siphon (3,700 long, 21 diam.) Santa Cruz River Siphon (8,300 long, 13 diam.) Gila River Siphon (3,200 long, 19 diam.) 33 Siphon Stop Logs at Cunningham, Gila, and Santa Cruz Centennial Wash Underground Siphon Crossing Typical Siphon Outlet without Stop Log Guides 34 17

22 Siphon Stop Logs at Cunningham, Gila, and Santa Cruz Stop Log and Bubble Log Installation Sequence 3 Siphon Stop Logs at Cunningham, Gila, and Santa Cruz Project Schedule & Budget o February 2016 to November 2017 o $2.6 Million Interior View of Stop Log Installation 20 height Maintenance Inspection in Dewatered Siphon 36 18

23 Questions? Rate Reconciliation Budget Published Rate Budget Advisory Rate Water O&M Costs (Thousands) Fixed O&M $ 86,324.4 $ 92,907.0 $ 92,842.3 $ 96,141.0 Pumping Power (Energy Rate 1) 112, , , ,722.0 Water Deliveries (Acre-Feet) Billed Fixed OM&R Water Volumes & Credits (AF) 1,533,989 1,588,324 1,550,022 1,574,159 Energy Rate 1 Water Volumes (AF) 1,518,989 1,573,324 1,535,022 1,559,159 Calculated Fixed OM&R Rate ($/AF) $ $ $ $ Capital Replacement Component Rate Stabilization Component Navajo Decommissioning Rate Calculated Energy Rate Total Rates ($/AF) $ $ $ $ Funds available from reconciliation-fixed OM&R ($000) $ 4,180.1 $ - $ 1, $ - Funds available from reconciliation-energy ($000) $ 2,730.1 $ - $ 4, $ - Total Funds available from reconciliation ($000) $ 6,910.2 $ - $ 5, $ - Volumes are delivered acre feet (including credits). In 2016, a credit is added to reduce the Fixed O&M costs for the Ag forbearance program so that it does not have an impact on the Fixed OM&R rate (forbearance is 80,072 acre feet which is ~$4.5 million)

24 Strategic Reserves Revenue deficiency is driving strategic reserves down, mainly from: Ag Consideration and Ag Incentive programs higher than the property taxes dedicated to cover them Higher federal repayment due to losses on surplus power Delay in payment for back capital charges & interest from NIA reallocation Timing of second bond issue outside of budget timeframe 39 CAGRD Key Points o 2016/2017 and 2017/2018 rates are advisory rates o Membership dues included o Assumes NIA allocation finalized in 2017 o Assumes a modest increase in the rate of Member Lands enrollments over budget period o Assumes $10 million bond issuance at the end of

25 CAGRD (Thousands) Actual Actual Projection Budget Budget Operating Revenues Reimbursements & other operating revenues $ 23,250.1 $ 26,408.4 $ 29,478.5 $ 33,419.4 $ 36,309.0 Operating Expense Salaries and related costs (915.8) (931.9) (944.3) (979.1) (1,008.5) Outside services (813.2) (2,029.4) (2,302.9) (1,328.4) (980.4) Overhead (979.1) (920.3) (937.3) (1,077.2) (1,109.5) Water for recharge (5,358.5) (5,519.6) (6,750.9) (7,613.3) (8,312.2) Other expenses (18.3) (17.0) (25.6) (32.9) (32.9) Total operating expenses (8,084.9) (9,418.2) (10,961.0) (11,030.9) (11,443.5) Operating Income 15, , , , ,865.5 Non-Operating Revenues/Expenses Interest Income Interest Expense (442.9) Total non-operating revenue/expenses (270.2) Change in Net Position $ 15,243.9 $ 17,059.1 $ 18,619.3 $ 22,525.7 $ 24,595.3 Obligations (year reported)-000 acre feet Captive Fund (Thousands) Actual Actual Projection Budget Budget Operating Revenues Reimbursements and other operating revenues $ 7,473.1 $ 7,877.9 $ 8,053.5 $ 8,538.9 $ 8,824.1 Operating Expense Outside Services (172.8) (172.7) (176.1) (162.4) (162.7) Other Expense (6,444.2) (8,751.0) (7,743.0) (8,240.1) (8,572.7) Total Operating Expense (6,617.0) (8,923.7) (7,919.1) (8,402.5) (8,735.4) Operating Income (1,045.8) Non-Operating Revenues Interest Income Change in Net Position $ $ (1,038.6) $ $ $

26 Supplemental Water Account (Thousands) Actual Actual Projection Budget Budget Operating Revenues/Expenses $ - $ - $ - $ - $ - Non-Operating Revenues Interest Income Change in Net Position $ 35.1 $ $ $ $ Cash Balance at Year End $ 7,881.5 $ 8,046.5 $ 8,169.4 $ 8,315.0 $ 8,479.7 The purpose of the trust fund was for acquisition or conservation of water for use in central Arizona to supplement CAP water supplies in years when water supplies from the CAP are insufficient to meet the delivery schedules of M&I users