Public Utilities Commission of the City and County of San Francisco. Power Enterprise. Annual Disclosure Report. For Fiscal Year Ending June 30, 2015

Transcription

1 Public Utilities Commission of the City and County of San Francisco Power Enterprise Annual Disclosure Report For Fiscal Year Ending June 30, 2015

2 March 31, Golden Gate Ave., 13th Floor San Francisco, CA T F TTY VIA: MSRB EMMA Ladies and Gentlemen: Attached hereto is the Fiscal Year 2015 Annual Disclosure Report for the Public Utilities Commission of the City and County of San Francisco (SFPUC), Power Enterprise. This filing relates to the following associated base CUSIP number(s): SFPUC Power Enterprise 79771K This Annual Disclosure Report is being provided by the SFPUC in connection with our undertaking entered into in accordance with Rule 15c2-12, promulgated by the U.S. Securities and Exchange Commission. The information provided in this Annual Disclosure Report speaks only as of its date, March 31, The delivery of this Annual Disclosure Report may not, under any circumstances, create an implication that there has been no other change to the information provided in any final official statement. Other than as set forth in the Continuing Disclosure Agreement, SFPUC has not agreed to notify the secondary market of subsequent changes to the information in this Annual Disclosure Report ( Report ). The filing of this Report does not constitute or imply any representation (1) that any or all of the information provided is material to investors, (2) regarding any other financial, operating or other information relating to the security for the referenced securities, (3) that no changes, circumstances or events have occurred which may have a bearing on the security for the referenced securities or an investor s decision to buy, sell, or hold the referenced securities. Any statements regarding the referenced securities, other than a statement made by the City and County of San Francisco in an official release or subsequent notice or annual report, published in a financial newspaper of general circulation and/or filed with the Municipal Securities Rulemaking Board (MSRB) or on Electronic Municipal Market Access (EMMA), are not authorized by the SFPUC. The SFPUC shall not be responsible for the accuracy, completeness, or fairness of any such unauthorized statement. If you have any questions regarding this Annual Disclosure Report, please contact Eric Sandler, Assistant General Manager, Business Services & CFO at (415) or by at ESandler@sfwater.org. Page 2

3 Sincerely, Harlan L. Kelly, Jr. General Manager Enclosure CC: José Cisneros, Treasurer Ben Rosenfield, Controller Dennis J. Herrera, City Attorney Nadia Sesay, Director, Office of Public Finance Angela Calvillo, Clerk of the Board of Supervisors Page 3

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5 Power Annual Disclosure Report SAN FRANCISCO PUBLIC UTILITIES COMMISSION Francesca Vietor, President Anson Moran, Vice President Ann Moller Caen, Commissioner Vince Courtney, Commissioner Ike Kwon, Commissioner PUBLIC UTILITIES COMMISSION OFFICIALS Harlan L. Kelly, Jr., General Manager Michael Carlin, Deputy General Manager & Chief Operating Officer Barbara Hale, Assistant General Manager, Power Enterprise Juliet Ellis, Assistant General Manager, External Affairs Kathy How, Assistant General Manager, Infrastructure Division Tommy Moala, Assistant General Manager, Wastewater Enterprise Steven Ritchie, Assistant General Manager, Water Enterprise Eric Sandler, Assistant General Manager, Business Services and Chief Financial Officer CITY AND COUNTY OF SAN FRANCISCO MAYOR Edwin M. Lee BOARD OF SUPERVISORS London Breed, President John Avalos David Campos Malia Cohen Mark Farrell Jane Kim Eric Mar Aaron Peskin Katy Tang Scott Wiener Norman Yee CITY ATTORNEY Dennis J. Herrera CITY TREASURER José Cisneros OTHER CITY AND COUNTY OFFICIALS Ben Rosenfield, Controller Naomi M. Kelly, City Administrator Current as of March 31, 2016 Page 5

6 Power Annual Disclosure Report The San Francisco Public Utilities Commission (SFPUC) hereby provides this Annual Disclosure Report for the fiscal year ending June 30, 2015 in connection with obligations undertaken pursuant to Continuing Disclosure Certificates for revenue bonds issued by SFPUC s Power Enterprise, as provided in the table below. Audited Financial Statements for the years ending June 30, 2014 and June 30, 2015 are submitted separately and may be viewed on EMMA or downloaded from the SFPUC website at: Name of Bonds Public Utilities Commission of the City and County of San Francisco Power Revenue Bonds, 2015 Sub- Series A (Green) Public Utilities Commission of the City and County of San Francisco Power Revenue Bonds, 2015 Sub- Series B Original Par ($000 s) $32,025 $7,530 Dated Date May 20, 2015 May 20, 2015 Official Statement Date May 7, 2015 May 7, 2015 Purpose Finance rehabilitation of hydropower generation facilities Finance rehabilitation of transmission & distribution lines Trustee U.S. Bank US Bank Source of Undertaking Continuing Disclosure Certificate, May 20, 2015 Continuing Disclosure Certificate, May 20, 2015 Page 6

7 Power Annual Disclosure Report For the convenience of bondholders, the following table provides CUSIP numbers for revenue bonds outstanding during the Fiscal Year ending June 30, No assurance as to the accuracy or completeness of such CUSIP numbers is given. The base CUSIP number for these bonds is: 79771K Maturity 2015A 2015B November 1 (Green) 2017 AP AQ AR AS AT AU AV AW AX AA4 AY AB AC AD AE AF AG AH AJ AK AL AM AN6 Page 7

8 Power Annual Disclosure Report The following tables are provided pursuant to the Continuing Disclosure Certificates executed in connection with the SFPUC s Power Revenue Bonds. SFPUC POWER ENTERPRISE ELECTRIC SERVICE ACCOUNTS BY CUSTOMER CATEGORY FOR FISCAL YEARS ENDED 2011 TO City Agencies 1,437 1,437 1,449 1,470 1,480 Non-City Agencies (e.g. SFUSD, SF Community College District) (1) (2) Moccasin/City of Riverbank Modesto/Turlock Irrigation Districts Total Accounts: 2,270 2,260 2,257 2,271 2,305 (1) (2) Non-City Agencies include electric retail and municipal customers such as Moscone tenants, Exploratorium, and Yerba Buena Gardens. Includes new accounts in the Hunter s Point Shipyard Redevelopment Project. Source: SFPUC Comprehensive Annual Financial Report, June 30, 2015 Page 8

9 Power Annual Disclosure Report SFPUC POWER ENTERPRISE MUNICIPAL CUSTOMERS AVERAGE RATES FOR FISCAL YEARS TO Municipal Power Service Rates FY Historical Rates FY FY Adopted Rates (1) Adopted Rates (1) General Fund Department Activities and Related Customers 4.75 /kwh 5.75 /kwh 6.75 /kwh Public Libraries 8.13 /kwh 9.13 /kwh /kwh Moscone Convention Center Facilities 6.70 /kwh 7.70 /kwh 8.70 /kwh San Francisco General Hospital 1.70 /kwh 2.70 /kwh 3.70 /kwh Laguna Honda Hospital 2.49 /kwh 3.49 /kwh 4.49 /kwh Public Buildings and San Francisco City Street Lights Enterprise Departments (tied to PG&E rates) 1.00 /kwh 2.00 /kwh 3.00 /kwh /kwh /kwh /kwh (1) Adopted by the SFPUC Commission May Source: SFPUC, Financial Services. Page 9

10 Issue Senior Lien Power Revenue Bonds SFPUC POWER ENTERPRISE OUTSTANDING INDEBTEDNESS FOR FISCAL YEAR ENDING JUNE 30, 2015 ($000 s) Date of Issue Power Annual Disclosure Report Final Maturity Original Principal Amount Principal Outstanding as of June 30, 2015 Power Revenue Bonds, 2015 Series A (Green) 5/20/ /1/2045 $32,025 $32,025 Power Revenue Bonds, 2015 Series B 5/20/ /1/2026 7,530 7,530 Total Senior Lien Debt: $39,555 $39,555 Subordinate Debt: Clean Renewable Energy Bonds 2008 (CREBs) 11/7/ /15/2022 $6,325 $3,373 Qualified Energy Conservation Bonds 2011 (QECBs) (1) 12/15/ /15/2027 8,291 6,844 New Clean Renewable Energy Bonds 2012 (NCREBs) (1) (2) 4/25/2012 4/25/2028 6,600 5,674 Total Subordinate Debt: (3) $21,216 $15,891 Total Debt: $60,711 $55,446 Totals may not add due to rounding. (1) (2) (3) The Power Enterprise receives $452k annually in Federal subsidy payments related to the 2011 QECBs and 2012 NCREBs. The Federal budget sequestration reduced the subsidy payments by $34k in fiscal year ending June 30, In July 2015, the Power Enterprise prepaid $2.5 million of taxable NCREB proceeds. See Subsequent Events section for further discussion of 2012 NCREB redemption. The SFPUC established a commercial paper program for the Power Enterprise with a not-to-exceed amount of $90 million in December See "Subsequent Events" section for further discussion of CP Program. Source: SFPUC, Financial Services. Page 10

11 Power Annual Disclosure Report SFPUC POWER ENTERPRISE HISTORICAL OPERATING RESULTS The Power Enterprise issued its 2015 Series A and B Power Revenue Bonds (the Series 2015 Bonds ) in FY The Series 2015 Bonds represent the first series of senior lien revenue bonds of the Power Enterprise, issued pursuant to the Master Trust Indenture dated May 1, Prior to issuing the Series 2015 Bonds, the Power Enterprise had issued, from time to time, certain Clean Renewable Energy Bonds ( CREBs and NCREBs ) and Qualified Energy Conservation Bonds ( QECBs ) that are payable from the Net Revenues of the Power Enterprise and are subordinate in lien (the Subordinate Obligations ) to the Series 2015 Bonds. The Subordinate Obligations were privately placed and have no CUSIPs. Interest on the Series 2015 Bonds is capitalized through May 1, The Power Enterprise will not be obligated to make debt service payments on the Series 2015 Bonds until FY Consequently, the Power Enterprise does not have a basis to calculate and report the Indenture-based debt service coverage ratio in FY Pursuant to the Continuing Disclosure Certificate executed in connection with the Series 2015 Bonds, the table below provides Historical Revenues and Operation and Maintenance Expenses of the Power Enterprise for Fiscal Years Ending June 30, 2011 through June 30, Page 11

12 Revenues: Power Annual Disclosure Report SFPUC POWER ENTERPRISE HISTORICAL REVENUES AND OPERATION AND MAINTENANCE EXPENSES FOR FISCAL YEARS ENDED JUNE 30 (IN THOUSANDS) (1) Charges for services $ 108,454 $ 94,680 $ 96,398 $ 98,693 $ 108,841 Rent & concessions Subtotal Operating Revenues $ 108,594 $ 94,814 $ 96,533 $ 98,816 $ 108,968 Interest & investment income 1,965 2, ,289 1,253 Other non-operating revenues 7,424 5,800 4,892 5,798 9,302 Subtotal Non-Operating Revenues $ 9,389 $ 8,389 $ 5,031 $ 7,087 $ 10,555 Total Revenues $ 117,983 $ 103,203 $ 101,564 $ 105,903 $ 119,523 Expenses: Personnel services $ 28,474 $ 31,719 $ 33,564 $ 33,762 $ 33,240 Contractual services 6,063 4,726 4,956 4,063 7,852 Purchased power & related costs 19,269 21,539 20,891 26,215 20,296 Materials and supplies 1,638 1,694 1,671 2,075 1,039 Depreciation (2) 9,582 9,796 11,079 11,128 13,785 Services provided by other departments and general & administrative 7,101 7,947 8,665 9,711 5,979 Other operating expenses (3) 14,114 16,186 12,433 14,086 23,031 Subtotal Operating Expenses $ 86,241 $ 93,607 $ 93,259 $ 101,040 $ 105,222 Interest expense ,641 1,574 1,815 Amortization of Premium discount, and issuance costs (28) 893 Other non-operating expenses 4,403 3,217 3,025 2,485 2,494 Total Expenses $ 91,206 $ 96,947 $ 97,932 $ 105,071 $ 110,424 Change in net position before transfers 26,777 6,256 3,632 1,034 9,099 Transfers in (out) (184) (2) (196) (38) 2,043 Extraordinary item: Rim Fire Loss (4,134) ---- Change in net position 26,593 6,254 3,436 (3,138) 11,142 Net position at beginning of year $ 343,221 $ 369,594* $ 375,848* $ 379,284 $ 355,381** Net position at end of year $ 369,814 $ 375,848 $ 379,284 $ 376,146 $ 366,523 * Restated per Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets & Liabilities. ** Cumulative effect of accounting change per implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions. (1) The historical results of operations reflected in the following table are based on the tables contained in the Financial Statements entitled Statements of Revenues, Expenses, and Changes in Net Assets and Statements of Cash Flows for the Fiscal Years listed. (2) Depreciation is excluded from Operation and Maintenance Expenses under the Indenture. (3) Includes operating programmatic expenses associated with facility maintenance, a portion of which is excluded from Operation and Maintenance Expenses under the Indenture. Source: SFPUC, Hetch Hetchy Water & Power Audited Financial Statements. Page 12

13 SUBSEQUENT EVENTS Power Annual Disclosure Report New Clean Renewable Energy Bonds ( NCREBs ) Redemption On July 28, 2015, the Power Enterprise prepaid $2.5 million of taxable proceeds related to $6.6 million New Clean Renewable Energy Bonds (NCREBs) issued in The unspent proceeds resulted from project cancellation and savings associated with a completed solar project.. Funds were returned to Banc of America Leasing & Capital LLC (the Investor ) pursuant to the terms of the Equipment Lease/Purchase Agreement executed on April 1, New Clean Renewable Energy Bonds ( NCREBs ) On October 15, 2015, the SFPUC issued $4.1 million of New Clean Renewable Energy Bonds (the 2015 NCREBs ) to fund two qualified solar energy equipment projects of the Power Enterprise. The 2015 NCREBs mature in October 2032, and have a net effective interest rate of 1.39%. The 2015 NCREBs were privately placed, on a non-rated basis, with Banc of America Leasing & Capital LLC pursuant to an Equipment Lease/Purchase Agreement. Repayment of the 2015 NCREBs is secured by the net revenues of the Power Enterprise and is subordinate in lien to the Power Enterprise s 2015 Series AB Power Revenue Bonds. 3. Power Commercial Paper Program In December 2015, the SFPUC established a new commercial paper program for the Power Enterprise in a not-to-exceed authorized amount of $90 million (the CP Program ). Repayment of CP Notes issued under the CP Program is secured by the net revenues of the Power Enterprise, and will be subordinate in lien to the Power Enterprise s 2015 Series AB Power Revenue Bonds. The CP Program is further secured by an Irrevocable Direct Pay Letter of Credit issued by Bank of America, N.A., with a stated expiration date of December 17, As of the date of this report, there were no CP Notes issued and outstanding under the CP Program. 4. Letters of Credit to Support CleanPowerSF Program On February 10, 2016, the SFPUC obtained Standby Letters of Credit with J.P. Morgan Chase, N.A. (the LOCs ) to secure potential termination payment obligations of the CleanPowerSF program pursuant to power purchase agreements that CleanPowerSF entered into with two energy suppliers to meet the projected energy needs for the Phase 1 launch of the program. In the event that CleanPowerSF is unable to make a termination payment pursuant to the terms of a power purchase agreement, the energy supplier can draw on its LOC for payment. In order to provide initial development support of CleanPowerSF, the LOCs are secured by the net revenues of the Power Enterprise at the lowest priority lien level as set forth under the Power Indenture, with such lien level subordinate to all of the Power Enterprise s debt obligations, including the 2015 Series AB Power Revenue Bonds. The LOCs do not secure CleanPowerSF s obligations beyond Phase 1. The initial and reduced stated amounts and expiration date of each LOC is as follows: (1) $10,998,011 declining to $2,691,746, with an expiration date of July 15, 2019; and (2) $6,000,000 declining to $757,848, with an expiration date of August 15, Project Substitution for 2015 Sub-Series A Bonds (Green Bonds) In May 2015, the SFPUC issued the 2015 Series AB Power Revenue Bonds to fund projects of the Power Enterprise capital program. Of these projects, several were Hetch Hetchy hydropower generation facility projects with the Green Bond designation. Subsequent to the issuance of the 2015 Series A Bonds, the Power Enterprise Capital Budget was revised. In the new Capital Budget, the Moccasin Hydroelectric Generation Rewind Project was replaced by the Mountain Tunnel Conveyance Project to receive funding from proceeds of the 2015 Series A Bonds. The SFPUC has received an opinion from Sustainalytics, an independent consulting firm that specializes in certifying projects for Green Bond funding. The opinion concludes that the Mountain Tunnel Conveyance Project provides environmental benefit and, hence, is appropriate for funding from proceeds of the 2015 Series A Bonds (Green Bonds). Page 13