FY nd Quarter Budget Report

Size: px

Start display at page:

Download "FY nd Quarter Budget Report"

Paula Jackson
6 years ago
Views:

1 San Francisco Water, 1; Sewer Services of the San Francisco Public Utilities Commission FY nd Quarter Budget Report January 28, 2014 SFPUC Finance

2 Key Budgetary Variances! Retail Water & Sewer Revenues Higher than Budget Wholesale Water Revenues Lower due to 2013 Prepayment Retail Waterf5.0%, Wholesale Water 15.1% vs. Budget Water \ m Sources... because of Wholesale revenue timing difference t* Uses Savings...debt service, bond refinancing savings Wastewater t» Sources...water use > than budget and property rental revenues f Uses Savings...debt service lower from bond refinancing savings Power Enterprise 1«Sources below budget... power sales lower, GF Departments & the Districts f Uses Savings...PG&E Interconnection Agreement and CAISO charge savings

3 San Francisco Water Sewer FY Projected vs. Prior Year-End ions Prior Year-End FY Year-End Projected Water $ $ Wastewater Hetch Hetchy

4 San Francisco Water Key Reserve Ratios Fund Balance Reserves meet one or more 15% of Annual Revenues 15% of Annual Expenses 1.25 Debt Service Coverage Ratio Water Wastewater Hetchy Power Debt Service Coverage, exceeds 1.25 times requirement Indenture Basis... includes current year results & fund balance Current Basis... includes only current vear results

5 Questions

6 San Francisco Water San Francisco Public Utilities Commission FINANCIAL SERVICES 525 Golden Gate Ave., 4 th Floor San Francisco, CA M E M O R A N D U M DATE: TO: JANUARY 17, 2014 VINCE COURTNEY, PRESIDENT ANN MOLLER CAEN, VICE PRESIDENT FRANCESCA VIETOR, COMMISSIONER ANSON MORAN, COMMISSIONER ART TORRES, COMMISSIONER THROUGH: HARLAN L. KELLY, JR., GENERAL MANAGER, SFPUC FROM: TODD L. RYDSTROM, AGM BUSINESS SERVICES & CFO, SFPUC cc: MICHAEL CARLIN, DEPUTY GENERAL MANAGER, SFPUC EMILIO CRUZ, AGM, INFRASTRUCTURE, SFPUC JULIET ELLIS, AGM, EXTERNAL AFFAIRS, SFPUC BARBARA HALE, AGM, POWER, SFPUC TOMMY MOALA, AGM, WASTEWATER, SFPUC STEVE RITCHIE, AGM, WATER, SFPUC KATE HOWARD, BUDGET DIRECTOR, MAYOR'S OFFICE BEN ROSENFIELD, CONTROLLER SUBJECT: SFPUC SECOND QUARTER BUDGETARY STATUS REPORT FY Enclosed are the second quarter budgetary reports for the three Enterprises' annual operating budgets for FY Actual revenues for the Wastewater Enterprise are slightly better than budget. Water Enterprise revenues are below budget due to the early recognition of Wholesale Capital Repayments in the prior fiscal year, which was the primary cause of the large reserves shown below. Hetchy net revenues continue slightly below budget primarily due to lower power sales to General Fund departments and the Districts. Net surpluses are projected for the three Enterprises at year end. All debt service coverage requirements continue to be met, and adequate fiscal year-end reserves are projected in all funds. Current Year Operations Projected Beginning Fund Year End Available Balance Revenue Expenditure Available Fund Budgeted to Surplus / Savings / Surplus Fund Balance be (Used) (Shortfall) (Shortfall) / (Shortfall) Balance Water "$ ^(81.5) $ (24.9) $ 46.9 $ 22.1 $ Wastewater $ 88.2 $ " $ 3.5 $ 12.0 $ 15.5 $ Hetch Hetchy $ 63.9 $ (20.7) $ (3.6) $ 10.4 $ 6.8 $ 50.0 Ifyou have questions, please contact me at (415) at your earliest convenience. Appendix A Water Enterprise Appendix B Wastewater Enterprise Appendix C Hetch Hetchy Water & Power, including the Power Enterprise

7 Appendix A WATER ENTERPRISE OPERATING FUNDS FY nd Quarter - Budgetary Basis, 5W AAA ($ Millions) FY FY Actuals Original Budget Revised Budget Projected Variance Available Fund Balance as a Source $ $ 19.8 $ $ $ Sources Retail Water Sales A Retail Water Sales - In-City Departments B Wholesale Water Sales Revenue (32.8) C Interest Income D Rental Income Miscellaneous Revenues Departmental Transfer Adjustment (35.1) (33.3) (33.3) (33.3) - Subtotal Operating Sources (23.0) Federal Interest Subsidy (1.9) E Total Bond Proceeds & Interest Subsidy Sources (1.9) Operating Uses Personnel F Non-Personal Services Materials and Supplies Equipment Light, Heat and Power Overhead (SFPUC Bureaus & City) Services of Other Departments Total Operating Uses Debt Service G Capital Projects Facilities Maintenance/Programmatic General Reserve H Total Uses - Operating, Debt Service, Capital & Other $ $ $ $ $ 46.9 Net FY Results $ 22.1 Available Fund Balance as of Fiscal Year-End Available Fund Balance as of Fiscal Year-End $ Available Fund Balance Reserves as a % of... (I) Total Operating Sources 67.0% 62.8% 60.3% Total Operating Uses 166.7% 151.3% 113.5% Total Uses (excluding General Reserve) 77.9% 65.8% 43.0% Debt Service Coverage... Year-End Budgetary Basis (J) Indenture Basis (includes Available Fund Balance) Current Basis

8 Appendix A WATER ENTERPRISE OPERATING FUNDS FY nd Quarter - Budgetary Basis, 5W AAA ($ Millions) Revenue Variances A. Retail water sales are projected to reach $183 million, a 5.0% increase from budget primarily due to the adopted rate increase. Water consumption is projected to be the same as last year. B. City Department water sales are projected to reach $6.9 million, a 9.3% increase from budget, primarily due to water consumption being more than assumed in the budget. Compared to last year, water usage is only up 1.4% however. C. Wholesale water revenues are projected to fall short of budget by $32.8 million, or 15.1%, as a result of a lower FY wholesale rate since Wholesale Customers made an early repayment of $356 million in the prior year. Wholesale water deliveries are projected to be one percent more than last year. D. Interest earnings projected to surpass budget by year-end as a result of a higher fund balance reserves than previously assumed in the budget. E. The variance in Federal Subsidy of $1.9 million is due to the IRS sequestration, which reduced federal subsidies for 2010 B, 2010 E, 2010G, and 2009 COPs by 7.2%. Expenditure Variances F. Savings in salaries due to vacant positions and corresponding fringe benefits. G. Refundings of Water Bond Series 2012 C and D resulted in $13.9 million savings, and the defeasance related to the Wholesale Customer early repayment in February 2013 resulted in an additional $25.9 million savings. H. General Reserve was intentionally budgeted and planned to go unspent to build up fund balance reserves. Other Notes I. GFOA Recommended Best Practice is at least 5-15% of revenues or 1-2 months of expenditures. J. Debt service coverage calculations made including the Federal Interest Subsidy as an offset to Debt Service.

9 Appendix B WASTEWATER ENTERPRISE OPERATING FUNDS FY nd Quarter - Budgetary Basis, 5C AAA ($ Millions) FY Original Revised Actuals Budget Budget FY Projected Variance Available Fund Balance as a Source i Sources Sewer Service Charge Sewer Service Charges City Departments Interest Income Other Miscellaneous Income Total Operating Sources Federal Interest Subsidy Operating Uses Personnel Non-Personal Services Materials and Supplies Equipment Light, Heat, and Power Overhead (SFPUC Bureaus) Services of Other Departments Total Operating Uses Debt Service Capital Projects Facilities Maintenance/Programmatic General Reserve Total Uses - Operating, Debt Service, Capital & Other $ 70.9 $ - $ 32.2 $ $ A (1.2) B (0.5) C D (0.3) E F G H $ $ $ $ $ 12.0 Net FY Results Available Fund Balance as of Fiscal Year-End 88.2 Available Fund Balance Reserves as a % of... (I) Total Operating Sources Total Operating Uses Total Uses (excluding General Reserve) 36.0% 61.3% 38.8% 37.1% 63.6% 37.8% 41.0% 66.7% 38.4% Debt Service Coverage... Year-End Budgetary Basis (J) Indenture Basis (includes Available Fund Balance) Current Basis

10 I Appendix B WASTEWATER ENTERPRISE OPERATING FUNDS FY nd Quarter - Budgetary Basis, 5C AAA ($ Millions) Revenue Variances A. Retail sewer sales are projected to reach $244.8M, reflecting slightly more treatment flow than the budget previously assumed. Overall retail water usage is projected be flat over the prior year. B. City Department sewer sales are projected to reach $5.5M, a 18.1 % decrease from budget due to reduced lower than previously assumed in the budget. Water usage is up about 1.4% compared to last year. C. Lower interest revenues projected due to a lower cash balance. D. Miscellaneous Income is projected to surpass budget by $0.6M as a result of Biofuel Revenues and higher City Property Rental revenue. E. Variance in Federal Subsidy of $0.3M due to IRS sequestration reduction of 7.2% related to the 2010 B Series Build America Bonds. Expenditure Variances F. Savings in salaries due to vacant positions and corresponding fringe benefits. G. $8 million in savings primarily results from 2013A refunding bonds in January 2013, which refunded all outstanding 2003A Wastewater Revenue bonds and State Revolving Fund loans. H. General Reserve was intentionally budgeted to go unspent to supplement fund balance reserves. Other Notes I. GFOA Recommended Best Practice is at least 5-15% of revenues or 1-2 months of expenditures. J. Debt Service Coverage includes the Federal Interest Subsidy as an offset to debt service expense.

11 Appendix C HETCH HETCHY WATER & POWER OPERATING FUNDS FY nd Quarter - Budgetary Basis, 5T AAA ($ Millions) FY FY Original Revised Actuals Budget Budget Projected Variance Available Fund Balance as a Source S 54.0 $ 20.7 $ $ S 43.2 Sources Electric Sales - City Work Orders - General Fund Depts (0.7) A Electric Sales - City Work Orders - Enterprise Depts B Electric Sales - Modesto & Turlock Irrigation Districts, WSPP (1.6) C Electric Sales - Direct, Non-City Depts., SFUSD, Community College (0.3) D Electric Sales - Treasure Island Subtotal - Electric Revenues (0.5) Water Sales - Transfer from Water Department Water Sales - Groveland, Lawrence Livermore Labs E Subtotal - Water Revenues Natural Gas & Steam - City Work Orders (2.4) F Interest Income (0.8) G Federal Interest Subsidy (0.1) H Other Miscellaneous Income (property rental, Transbay Cable (0.6) I proceeds, Cap and Trade revenue) Total Operating Sources (3.6) Operating Uses Personnel J Non-Personal Services Power Purchases K Transmission Fees L Materials and Supplies Equipment Overhead (SFPUC Bureaus) & COWCAP 12.B Services of Other Departments Natural Gas & Steam M Total Operating Uses Debt Service Capital/Revenue Reserve Facilities Maintenance/Programmatic General Reserve - Contingency/Purchase of Power N Total Uses s $ $ $ S 10.4 Net FY Results $ 6.8 J Available Fund Balance as of Fiscal Year-End $ 63.9 $ Available Fund Balance Reserves as a % of... (O) Total Revenues (Excluding Bond Proceeds) 42.1% 28.8% 33.6% Total Uses (Excluding General Reserve) 59.3% 38.8% 43.8% Total Operating Uses 45.1% 26.1% 16.7% Debt Service Coverage... Year-End Budgetary Basis Indenture Basis (includes Available Fund Balance) Current Basis

12 Appendix C HETCH HETCHY WATER & POWER OPERATING FUNDS FY nd Quarter - Budgetary Basis, 5T AAA ($ Millions) Revenue Variances A. Power revenues from General Fund departments are slightly below budget due to lower usage by Municipal Railway (Green Yard/Curtis E. Green Light Rail Center, Building and Grounds Maintenance) compared to budget. B. Power revenues from Enterprise departments are above budget due to higher usage by the San Francisco International Airport, Port of San Francisco, and the SFPUC Water Supply Division. C. Excess power sales are slightly below budget due to reduced Hetch Hetchy power available for sale partially due to a dry year and as a result of RIM fire shutdowns. D. Power revenues from Direct Pay, Retail are slightly below budget due to lower usage by the San Francisco Housing Authority. E. Water revenues from Lawrence Livermore Lab are above budget due increased water sales. F. Gas and Steam revenues are below budget due to lower planned rates for natural gas. G. Lower interest revenues projected due to a lower cash balance. H. Variance of $55,000 due to IRS sequestration rate of 7.2% as applied to the 2011 QECBs and 2012 NCREBs. I. Variance resulting from lower than expected property rental income from O'Shaughnessy Dam cottages and Camp Mather. Expenditure Variances J. The savings in salaries and related fringe benefits are due to the number of vacant positions in Hetchy Water with partially offsetting higher overtime cost by staff assigned to RIM fire response and recovery work. K. The $3.2 million surplus includes: $2.5 million in lower purchases from Western Systems Power Pool (WSPP) and $0.4 million in lower transmission costs from Independent Systems Operator (ISO); $0.3 million from Local Capacity Requirements - no shortages; and $0.02 million due to slightly lower than expected solar purchases from the Sunset Solar Power Purchase Agreement. L. The $3.3 million surplus includes $1.3 million savings for distribution, demand charges, and capacity reserve under the PG&E Interconnection Agreement (IA) and $2 million savings from ISO grid management and control area charges. M. Gas and Steam revenues are below budget due to lower natural gas rates, (see offsetting amount noted in "F" above). N. The $4.0 million contingency is projected used for RIM fire costs. Other Notes O. GFOA Recommended Best Practice is at least 5-15% of revenues or 1-2 months of expenditures.

FY rd Quarter Budget Report

FY rd Quarter Budget Report Services of the San Francisco Public Utilities Commission FY 2013-14 3rd Quarter Budget Report May 13, 2014 SFPUC Finance 1 Key Budgetary Variances Retail Water & Sewer Revenues Higher than Budget Wholesale