HomeMy WebLinkAboutStaff Report 171-10TO:
FROM:
ATTENTION:
DATE:
SUBJECT:
HONORABLE CITY COUNCIL
CITY MANAGER
FINANCE COMMITTEE
MARCH 16, 2009
DEPARTMENT: UTILITIES
CMR: 171:10
Long-term Financial Projections and Revenue Requirements for the
Electric, Water, Gas and Wastewater Collection Funds
This is an informational report and no action is required.
DISCUSSION
Staff has discussed the five-year financial projections for the Electric, Water, Gas and
Wastewater Collection Funds with the Utilities Advisory Commission (UAC). Staff does not
recommend a retail revenue adjustment for FY 2011 for these four funds. Therefore, no action is
proposed or recommended at this time for retail rate adjustments for electric, water, gas, and
wastewater services. No rate changes are proposed for fiber services except for the EDF-1 fiber
rate schedule, which has an annual adjustment tied to the Consumer Price Index (CPI). This rate
adjustment and discussion of financial forecast for the Fiber Optic Fund will be provided to the
Finance Committee at a later date. This report does not include an update on potential FY 2011
rate adjustments for refuse or storm drain services.
When the attached reports were discussed by the UAC in February (for electric, water, and gas
services) and in March (for wastewater services), staff's preliminary assessment was that no
retail revenue adjustment was needed for electric, gas, or wastewater services, but that a 5%
increase for water services was potentially justified since the wholesale cost of water is projected
to rise in the future and a small increase in FY 2011 would reduce future annual rate increases.
In February, the UAC asked staff to evaluate a scenario with no water rate increase. In late
February, the San Francisco Public Utilities Commission provided updated wholesale water rate
projections, which lowered projected rates for FY 2011 and the entire 5 -year forecast horizon.
As a result of both UAC input and this new updated water supply cost information, staff now
recommends no retail revenue adjustment for water services.
Although no retail revenue adjustments are recommended for FY 2011 for the Electric, Water,
Gas and Wastewater Collection Funds, staff may propose revenue -neutral rate structure changes
to achieve policy objectives. Examples of these changes could include readjustment of tiered
billing blocks for residential customers, or adjustments between the fixed and usage -based
charges. In addition, the City has engaged a consultant to prepare a cost -of -service study for
CMR: 171:10 Page 1 of 2
each of the four funds. These studies are not yet complete, but staff expects there will be
realignments of costs between customer classes. Therefore, although no overall retail revenue
increases are being proposed, rates for certain customer classes could be impacted by rate
changes to align rates with the cost of service and certain customers within a customer class
could be impacted by rate structure changes. Staff will discuss rate structure changes and
potential realignment with costs of service with the UAC prior to preparing a recommendation
for the Finance Committee or Council on any retail rate adjustments. Even if only revenue
neutral changes are proposed to water and wastewater collection rates, the changes must follow
the Proposition 218 noticing and public hearing process. If needed, this process will be
followed.
ATTACHMENTS
A. February 3, 2010 Report to the UAC: Long-term Financial Projections and Revenue
Requirements for the Water Fund
B. February 3, 2010 Report to the UAC: Long-term Financial Projections and Revenue
Requirements for the Gas Fund
C. February 3, 2010 Report to the UAC: Long-term Financial Projections and Revenue
Requirements for the Electric Fund
D. March 9, 2010 Report to the UAC: Long-term Financial Projections and Revenue
Requirements for the Wastewater Collection Fund
E. March 9, 2010 Report to the UAC: Updated Long-term Financial Projections and
Revenue Requirements for the Water Fund
PREPARED BY: IPEK CONNOLLY
Sr. Resource Planner
JANE O. RATCHYE
Utilities Assistant Director, Resource Management
DEPARTMENT APPROVAL:
CITY MANAGER APPROVAL:
VALERIE
Director of Utilities
<21
JAM E�ENE
City nager
CMR: 171:10 Page 2 of 2
ATTACHMENT A
MEMORANDUM
4
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: FEBRUARY 3, 2010
SUBJECT: LONG-TERM FINANCIAL PROJECTIONS AND REVENUE
REQUIREMENTS FOR THE WATER FUND
This report is for discussion purposes only. No action is required.
OVERVIEW
This report discusses the projected costs and revenue requirements for the Water Fund for Fiscal
Year (FY) 2011 through FY 2015.
Staff assessed major cost drivers and expected costs, the short-term assessment of risks, reserve
guidelines, and determined the revenue requirements for the Water Fund for the next five years.
Based on this analysis, staff's preliminary recommendation is for a revenue adjustment for FY
2011 of $1.4 million, corresponding to an average rate increase of 5%. The financial forecast
shows a requirement for additional rate increases of 5% per year for FY 2012 and FY 2013
followed by rate increases of 8% per year for FY 2014 and FY 2015. These rate adjustments
achieve a gradual increase of required revenue stream to fund the expected operating expenses
facing the Water Fund during the next five years, including the debt service for the bond
financing of the City's Emergency Water Supply and Storage Project. They also achieve the
goals of ensuring that the balance of the Water Rate Stabilization Reserve (W RSR) can cover
the short-term risk assessment value and is between the Council -approved minimum and
maximum guideline levels for the long-term forecast horizon.
The impact of the projected 5% FY 2011 rate adjustment is $3.60 on an average residential
customer's monthly utility bill of $72.01.
Staff will return to the UAC in March 2010 with rate adjustment proposals to be effective in July
2010. Besides the preliminary recommendation for a 5% overall revenue adjustment, staff may
propose rate structure changes that could impact customers more or less than the average 5%.
These changes may be informed by the Cost of Service studies that are underway and other City
policy objectives.
BACKGROUND
The revenue requirements and resulting rate adjustment targets depend on a number of
components including sales revenue projections, water supply costs, distribution system
Page 1 of 5
operating and capital improvement program (CIP) expenses, prudent rate stabilization and
emergency plant replacement reserves, and debt service payments. Any change in one or more
of these components can trigger a change, up or down, to the revenue requirement. During the
budget process, staff forecasts load, revenues and expenses to quantify the annual revenue
requirement.
DISCUSSION
Cost Drivers
Total expenses for the Water Fund are projected to increase from their budgeted levels of $50.8
million in FY 2010 to $58.0 million in FY 2015 as shown in Table 1 below.
Table 1
Five -Year Financial Plan - Projected Costs (in $thousands
� ^4
S_ / .. .�, r.N H , Sy✓ czb. s r.
__ _
Actual
2009
a..e. .. ..
Adopted
2010
. _ _ z
Projected
2010
.,n .r ,.e.m aw.4'',,,
Projected
2011
45sF..n. ..
2012
( w.-�+M .,.;...w
2013
..sx... ,.:...»..
2014
se,. _...
2015
Fiscal Year
OPERATING EXPENSES
1
PURCHASES
8,443
10,354
10,354
12,053
14,255
17,214
19,564
21,242
2
CUSTOMER DESIGN & CONN. (CIP)
343
400
400
410
420
430
440
450
3
SYSTEMIMPROVEMENT(CIP)- Nonbond
14,762
4,514
4,714
4,938
5,059
5,182
4,563
4,656
E
4
SYSTEM IMPROVEMENT(CIP)-Bond
0
22,500
22,500
3,500
0
0
8,000
16.000
X
5
OPERATIONS, & MAINT, OTHER ADMIN.
6,203
7,415
7,460
7,569
7,644
7,721
7,798
7,876
P
6
ALLOCATED CHARGES;
E
7
COST PLANCI-IARGES&OTHER
507
1,106
1,106
1,134
1,146
1,157
1,169
1,180
N
8
UTILITIES ADMINISTRATION
1,123
1,346
1,346
1,350
1,363
1,377
1,391
1,405
s
9
TOTAL MAJOR ACTIVITIES
31,380
47,634
47,879
30,954
29,888
33,081
42,924
52,810
DEBT SERVICE
776
775
5,295
2,373
2,734
2,741
2,753
2,762
E
10
S 11
12
TRANSFER$;
2,667
0
0
0
0
0
0
0
GENERAL FUND TRANSFER
13
RENT
1,919
2,107
2,107
2,107
2,128
2,150
2,171
2,193
14
OTHERTRANSFER
987
258
258
223
225
228
230
232
15
SUB -TOTAL TRANSFER
5,573
2,365
2,365
2,331
2,354
2,377
2,401
2,425
16
TOTAL OPERATING EXPENSES
37,730
50,774
55,639
35,657
34,976
38,199
48,078
67,997
There are two main drivers for the cost increases facing the Water Fund: Purchases (water supply
costs), and CIP related costs.
Water supply costs are projected to more than double from their current levels of $10.4 million
in FY 2010 to $21.2 million in FY 2015. This is due to planned infrastructure upgrade projects
that are being undertaken by the City's primary water supplier, the San Francisco Public Utilities
Commission (SFPUC). The City Council supports the infrastructure upgrade effort that will
repair and upgrade the regional water supply system. The costs of this project are being shared
by all of the SFPUC's water customers.
Another sizeable expenditure is for the City's emergency water reservoir and well infrastructure
project. The funds for this project are primarily from the issuance of municipal bonds in the
amount of $35.0 million earlier this year. The debt service expense for the project is $2.0 million
per year. Combined with the existing $775,000 debt service costs in the Water Fund, total debt
service payments will be $2.8 million annually.
Page 2 of 5
Staff is also considering another large capital project to extend the recycled water distribution
system that may impact the Water Fund within the five-year forecast horizon. The capital
expenditure for this project could total over $32 million and significant expenditures could start
in FY 2014. The sources of funds for the project have not been identified at this time, but are
likely to include a combination of state and federal grants, and a state low interest loan.
Additional funds for the recycled water project could come from project partners that have not
yet been identified and bond proceeds for the balance of the project costs.
Customer connection -related CIP costs, which are funded by customer connection fees, are
projected to increase by 3% annually and other ongoing CIP project costs to fund planned system
improvement activities by the Water Fund are projected to remain steady around their current
levels of $4.7 million throughout the forecast horizon.
Staff projects a long-term net cost increase of 1% per year in other operating expenditures such
as operations, maintenance and administration costs; allocated cost plan and Utilities
administration charges; rents, and other transfers.
Financial Resources, Required Reserve Levels and Revenue Requirements
Based on the City's Audited Financial Report (CAFR) for FY 2009, the W-RSR ended the fiscal
year with a balance of $5.4 million. This is slightly above the minimum reserve guideline level
of $5.3 million and well above the annual risk assessment value of $3.6 million. The balance of
the W-RSR is projected to be $10.3 million at the end FY 2010. While this is slightly above the
maximum reserve guidelines of $8.0 million, staff recommends annual rate adjustments of 5%
through FY 2013 followed by increases of 8% per year in FY 2014 and FY 2015 in order to
achieve a gradual increase of revenue to fund the expected operating expenses facing the Water
Fund.
Table 2 presents the projected financial resources available to the Water Fund, revenue
requirements, required rate adjustments and W-RSR levels. Without a rate adjustment, the W
RSR would have a balance much lower than minimum guideline levels starting in FY 2013. With
the projected rate adjustments, the Water Fund remains financially viable throughout the forecast
horizon.
Page 3 of 5
Table 2
Five -Year Financial Plan - Projected Financial Resources and Revenue Re i uirements
Fiscal Year
Projected
2010
Projected
2011
2012
2013
2014
2015
Total Sources of Funds
Total Uses of Funds
Into/(Out of) Reserves
ST Risk Assessed Value
LT Minimum Guideline
LT Maximum Guideline
REQUIRED RATE ADJUSTMENTS
3,541
5,303
13,258
66,026
50,819
15,207
14,089
3,765
4,330
8,660
66,297
55,539
10,757
10,282
3,765
4,330
8,660
34,673
35,657
(985)
9,297
4,168
4,515
9,030
% Change in System Average Rate
hange in Retail Sales Revenue
Ending RSR
8.0%
1,981
5,400
5.0%
1,375
14,089
5.0%
1,375
10,282
5.0%
1,433
10,671
31,069
34,976
(3,907)
5,391
4,813
9,626
5.0%
1,528
9,863
30,824
38,199
(7,374)
(1,984)
5,059
10,118
5.0%
1,606
7,388
38,944
48,078
(9,134)
(11,117)
5,469
10,938
47,033
57,997
(10,964)
(22,081)
5,912
11,825
Customer Bill Impact
The impact of the projected rate adjustment in FY 2011 on an average residential customer's
monthly utility bill is estimated to be $3.60, on a total bill of $72.01 per month.
Rate Comparison with Neighboring Cities
The City currently has higher water costs than neighboring cities as shown in Table 3 below.
Comparisons are based on the average residential customer usage of 14 CCF (one hundred cubic
feet) per month. Monthly bills are based on the most recently posted rates for each jurisdiction.
Table 3
Water Utility Residential Benchmark Comparison
Current FY 2010 as .of Janua 1, 2010
The required revenue increases discussed in this report may have an impact on the City's relative
position depending on future financial decisions by all cities compared here.
ATTACHMENT
Five -Year Financial Projections for the Water Fund
Page 4 of 5
PREPARED BY: ERIC KENISTON, Associate Resource Planner
IPEK CONNOLLY, Senior Resource Planner
REVIEWED BY:
JA E RATCHYE
I As . istant Director, Resource Management
DEPARTMENT HEAD:
VALE FONG
Director of Utilities
Page 5 of 5
Fiscal Year
Actual
2009
Adopted Projected Projected
2010 2010 2011
2012
2013
2014
2015
1
2
3
% CHANGE IN RETAIL RATE
SYSTEM AVERAGE RATE ($/CCF)
SALES UNITS (CCFs)
8.0%i
4.96
5,395
5.0%
5.21
5,543
5.0%
5.21
5,543
5.0%
5.47
5,504
5.0% 5.0%
5.74 6.03
5,588 5,594
8.0%
6.51
5,600
8.0%
7.03
5,605
4 WATER UTILITY REVENUE
5
R 6
E 7
v
E
N
u
E
s
9
10
11
12
13
4
15
SALES REVENUE:
RATE ADJUSTMENT
PRORATION IMPACT
24,757
1,981
(83)
27,493
1,375
(57)
27,494
1,375
(57)
28,666
1,433
(60)
30,559
1,528
(64)
32,024
32,120
1,606
(67)
33,660
33,759 36,496
2,701 1 2,920
(113) (122)
TOTAL ADJUSTED SALES 26,655
28,810
28,811
30,039
36,348
39,294
UNMETERED SALES/OTHER
INTEREST
OTHER REVENUE
CONNECTION FEES
FROM RESERVES:
RATE STABILIZATION
CIP BOND PROCEEDS
(127)
1,788
275
833
7,711
0
138
1,265
131
682
0
35,000
138
1,265
334
749
0
35,000
138
1,265
337
767
0
3,500
138
889
341
776
808
0
138
798
344
785
2,474
0
138
1,192
8,348
795
1,259
0
138
1,689
16,351
804
0
0
16 TOTAL FINANCIAL RESOURCES
37,135.
66,026
66,297
36,046
34,976
38,199
48,078
58,275
34
35
36
37
38
OPERATING EXPENSES
PURCHASES
CUSTOMER DESIGN & CONN. (CIP)
SYSTEM IMPROVEMENT(CIP) - Nonbond
SYSTEM IMPROVEMENT(CIP) - Bond
OPERATIONS, & MAINT, OTHER ADMIN.
ALLOCATED CHARGES:
COST PLAN CHARGES & OTHER
UTILITIES ADMINISTRATION
TOTAL MAJOR ACTIVITIES
8,443
343
14,762
0
6,203
507
1,123
31,380
10,354
400
4,514
22,500
7,385
1,106
1,346
47,604
10,354
400
4,714
22,500
7,460
1,106
1,346
47,879
12,053
410
4,938
3,500
7,569
1,134
1,350
30,954
14,255
420
5,059
0
7,644
1,146
1,363
29,888
DEBT SERVICE
TRANSFERS:
GENERAL FUND TRANSFER
RENT
OTHER TRANSFER
SUB -TOTAL TRANSFER
776
2,667
1,919
987
5,573
7,
775
0
2,107
258
2,365
5,295
0
2,107
258
2,365
2,373
0
2,107
223
2,331
60-
2,734
0
2,128
225
2,354
17,214
430
5,182
0
7,721
1,157
1,377
33,081
0
2,150
228
2,377
976
RESERVE ADDITIONS:
PLANT REPLACEMENT
RATE STABILIZATION
DEBT SERVICE RESERVE
TOTAL RESERVE ADDITIONS:
(595)
0
0
(595)
0
10,982
4,300
15,282
0
4,882
5,875
10,757
0
389
0
389
0
0
0
0
39 TOTAL REVENUE REQUIREMENT
37,135
66,026
66,297
36,046
34,976
R
E
40 RESERVES BALANCES
41 PLANT REPLACEMENT
42 RATE STABILIZATION
43 CIP DEBT SERVICE
1,000
5,400
780
1,000
14,089
5,080
20,169
1,000
10,282
6,655
1,000
10,671
3,155
1,000
9,863
3,155
S 44 TOTAL RESERVES BALANCES
E
R
V
E
s
45
46
47
48
49
50
51
Short Term Risk Assessment Value
Long Term Rate Stabilization Guidelines
RSR Minimum
RSR Maximum
7;180
3,594
5,303
13,258
11111111PORAVIE
3,765
4,330
8,660
17,937
3,765
4,330
8,660
14,826
4,168
4,515
9,030
14018
4,813
9,626
t x , 2010
2011Zc:'
38,199
1,000
7,388
3,155
10,118
19,564
440
4,563
8,000
7,798
1,169
1,391
42,924
2,171
230
2,401
48,078
1,000
6,130
3,155
10,938
21,242
450
4,656
16,000
7,876
1,180
1,405
52,810
2,762
0
2,193
232
2,425
5997..
0
278
0
278
58,275
1,000
6,408
3,155
0,563
5,912
11,825
2015
ATTACHMENT B
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: FEBRUARY 3, 2010
SUBJECT:
LONG-TERM FINANCIAL PROJECTIONS AND REVENUE
REQUIREMENTS FOR THE GAS FUND
This report is for discussion purposes only. No action is required.
OVERVIEW
This report discusses the projected costs and revenue requirements for the Gas Fund for the next
five years starting Fiscal Year (FY) 2011 through FY 2015.
Staff assessed cost trends and projections, short-term assessment of risks, and existing reserve
guidelines and determined the revenue requirements for the Gas Fund for the next five years.
Based on this analysis, staff's preliminary recommendation is' for no revenue adjustment for FY
2011. Based on projections as of December 2009, the expected revenue adjustments for the
remaining four years of the forecast horizon are 6%, 4%, 3% and 3%. These rate adjustments
would achieve the goals of ensuring that the balances of the Gas Supply and Distribution Rate
Stabilization Reserves (G-SRSR and G-DRSR) can cover the short-term risk assessment value
and are between the Council -approved minimum and maximum guideline levels for the long-
term forecast horizon.
Staff will return to the UAC in March 2010 with rate adjustment proposals to be effective in July
2010. Despite the preliminary recommendation for no overall revenue adjustment, staff may still
propose rate structure changes that could impact customers, if warranted by the Cost of Service
studies that are underway and other City policy objectives.
BACKGROUND
The revenue requirements and resulting rate adjustment targets depend on a number of
components including sales revenue projections, distribution system operating and capital
improvement program (CIP) expenses, prudent rate stabilization and emergency plant
replacement reserves, and debt service payments. Any change in one or more of these
components can trigger a change, up or down, to the revenue requirement. During the budget
process, staff forecasts load, revenues and expenses to quantify the annual revenue requirement.
Page 1 of 5
DISCUSSION
Cost Drivers
Total expenses for the Gas Fund are projected to increase from their budgeted levels of $45.9
million in FY 2010 to $50.7 million in FY 2015, a 4% average annual increase as shown in Table
1 below.
Table 1
Five -Year Financial Plan - Pro'ected Costs $thousands
10
11
12
13
14
15
16
17 TOTAL MAJOR ACTIVITIES
Fiscal Year
OPERATING EXPENSES
SUPPLY:
PURCHASES
OPERATIONS & MAINT., OTHER ADMIN.
ALLOCATED CHARGES
COST PLAN CHARGES & OTHER
UTILITIES ADMINISTRATION
SUB -TOTAL SUPPLY
DISTRIBUTION.
CUSTOMER DESIGN & CONN. (CIP)
SYSTEM IMPROVEMENT (CIP)
OPERATIONS & MAINT., OTHER ADMIN.
ALLOCATED CHARGES:
COST PLAN CHARGES & OTHER
UTILITIES ADMINISTRATION
CI ICI TnrAM niSTRiRI ITInN
18
19
20
21
22
23
24
DEBT SERVICE
TRANSFERS -
GENERAL FUND TRANSFER
RENT
OTHER TRANSFER
SUB -TOTAL TRANSFER
TOTAL OPERATING EXPENSES
Actual
681
7,898
5,087
690
1,699
5,829
690
1,699
6,729
25,091
94
76
25,934
1,070
941
15.677
41,611 39,026
Adopted Projected
2010 2010
26,859
171
58
28,220
1,344
1,244
10,806
949 947
3,135 5,300
205 215
1,638 367
4,978 5,882
47,537 45,854
22,475
171
58
23,837
1,344
1,244
11,706
35,642 42,818 41,655
Projected
2011
2012 2013 2014 2015
24,595
175
58
25,946
700
7,625
5,938
1,360
1,248
16 872
23,838
177
59
25,202
710
7,111
5,998
1,374
1,261
16 453
947 947 948
5,300 4,930 8,003
215 215 218
367 396 396
5,882 5,542 6,618
42,371 49,307 49,221
24,514
1,140
179
59
25,892
720
7,468
6,058
1,388
1,273
16,907
42,799
948
8,567
221
396
7,184
50,931
25,350
1,151
181
60
26,742
730
4,657
6,118
1,401
1,286
14,193
40,936
948
7,218
224
396
7,838
49,722
25,972
1,163
182
61
27,378
752
4,683
6,179
1,415
1,299
14,329
41,706
948
7,488
227
398
8,091
50,746
Commodity purchases constitute the largest cost item for the Gas Fund, accounting for 50% of
total costs, or $24.6 million in FY 2011. Supply costs remain volatile, but are mitigated by the
current laddering strategy. This cost category is projected to remain relatively flat throughout
the forecast horizon, expected to increase from $26.0 million in FY 2011 by an average of 1.4%
per year, over the five year forecast horizon. CIP costs are projected to increase to their pre -FY
2010 levels as the $5.0 million deferred CIP expenditures (due to a modification in the project
implementation plans for system improvements) are expected to resume starting in FY 2011.
Other Gas Fund expenses are projected to remain fairly stable throughout the rest of the forecast
horizon increasing at only 1% per year due to expected recovery of the economy.
The remaining costs consist of transfers to the General Fund and other funds and rent, which
together account for 14% of total costs at $5.8 million in FY 2010. Rent is projected to increase
by 1% per year, other transfers are projected to remain constant after FY 2010 and the General
Fund Transfer is projected to increase based on the Council -approved equity transfer
methodology. Altogether, these costs are projected to increase by 6.5% per year, totaling $8.1
million in FY 2015.
Page 2 of 5
Financial Resources, Required Reserve Levels and Revenue Requirements
Based on the City's Audited Financial Report (CAFR) for FY 2009, the G-SRSR ended the fiscal
year with a balance of $8.7 million and the G-DRSR ended the fiscal year with a balance of $4.4
million. These levels are slightly below the minimum reserve guideline level of $8.8 million for
G-SRSR and slightly above the minimum reserve guideline level of $3.9 million for the G-
DRSR. Both ending reserve levels are well above the annual risk assessment values of $6.5
million for the G-SRSR and $3.4 million for the G-DRSR.
Following a 10% gas rate reduction implemented on July 1, 2009, as of the end of FY 2010, the
balance of the G-SRSR is projected to be $10.6 million and the balance of the G-DRSR is
projected to be $5.1 million. At these levels, both reserves are expected to be within the
minimum and maximum guideline levels as well as above the risk assessment values for FY
2010.
Due to the high ending reserve levels expected for FY 2010, staff recommends no change in the
average retail rate for core (pool) customers in FY 2011. Large customers that are on market -
based commodity rates are expected to see a 32% average commodity rate increase based on
projections as of December 2009. As a result, the system average rate is expected to increase by
3.7% in FY 2011 followed by increases of 6%, 4%, 3% and 3% in each of the remaining years of
the five-year forecast horizon.
Table 2 presents the projected financial resources available to the Gas Fund, revenue
requirements, required rate adjustments and Gas RSR levels. Without a rate adjustment, the G-
SRSR would have a balance much higher than the maximum guideline levels and G-DRSR
would have a balance much lower than minimum guideline levels starting in FY 2011. With the
projected rate adjustments, the Gas Fund remains financially viable throughout the forecast
horizon.
Page 3 of 5
Table 2
Five -Year Financial Plan - Projected Financial Resources and Revenue Requirements
Fiscal Year
WITHOUT RATE ADJUSTMENTS
Total Sources of Funds
Total Uses of Funds
Intoi(Out of) Reserves
Ending Supply RSR
Ending Distribution RSR
RSR RESERVE GUIDELINES
Supply - ST Risk Assessed Value
Supply - LT Minimum Guideline
Supply LT Maximum Guideline
Distribution - ST Risk Assessed Value
Distribution - LT Minimum Guideline
Distribution - LT Maximum Guideline
REQUIRED RATE ADJUSTMENTS
Change in Average Pool Retail Rate
Change in Retail Sales Revenue
Ending Supply RSR
Ending Distribution RSA
Actual
2009
49,488
48,773
715
8,731
4,445
6,500
8.782
18,818
3,390
3,942
9,854
7.1%
3,436
8,733
4.449
Adopted
2010
45,925
45,854
71
7.456
5,1792
5.800
6.715
13,429
3.759
2,684
5,368
-9.3%
(4,647)
7,456
5.792
Projected
2010
44,983
42.371
2.612
10.644
5,144
5,800
5,619
11,238
3,759
2,646
5,293
-9.3%
(4,605)
10,646
5.147
Projected
2011
45,099
49,307
(4,208)
11,036
544
5,700
6,149
12,298
4,070
3,230
6,460
0.0%
745
7,961
4.340
2012
45,106
49.221
(4,115)
12,561
( 5,0961
5,959
11,919
3,460
6,919
6.0%
2,427
7,075
4,391
2013
45,072
50,931
(5,859)
13,601
(11.9951
6.128
12,257
3,471
6.941
4.0%
1,521
7,134
3.485
2014
44,940
49,722
(4,782)
13,960
(17,1361,
6,338
12,675
3.473
6,945
3.0%
1.185
7,695
4,589
2015
44,832
50,746
(5,914)
13,809
(2233991
6,493
12,986
3,475
6.950
3.0%
1,234
9.013
5,335
Customer Bill Impact
There will be no change on an average residential customer's monthly utility bill in FY 2011 due
to revenue requirements identified in this report unless structural rate changes are proposed when
staff returns with rate proposals for the UAC's consideration at its March 2010 meeting.
Rate Comparison with Neighboring Cities
The City currently has a cost disadvantage with respect to the Pacific Gas and Electric Company
(PG&E), the gas utility for the neighboring cities as shown in Table 3 below. Comparisons are
based on the average residential customer usage of 100 therms per month during the winter
months and 30 therms per month during the summer months. Monthly bills shown are based on
the average bill for the prior 12 months.
Page 4 of 5
Table 3
Gas Utility Residential Benchmark Comparison
Current FY 2010 as of January 1, 2010)
The City's current relative position with respect to neighboring cities may change in the future
depending on future financial decisions by PG&E.
ATTACHMENT
Five -Year Financial Projections for the Gas Fund
PREPARED BY:
REVIEWED BY:
DEPARTMENT HEAD:
ERIC KENISTON, Associate Resource Planner
IPEK CONNOLLY, Senior Resource Planner
JANE RATC
Assistant Director, Resource Management
4,
VALERIE
Director of Utilities
Page 5 of 5
Actual
Fiscal Year 2009
Adopted Projected
2010 2010
Projected
2011
2012 2013 2014 1 2015
2
3
% CHANGE IN TOTAL SYSTEM RETAIL RATE.
% CHANGE IN AVERAGE POOL RETAIL RATE
TOTAL SYSTEM AVG RATE ($/ THERM)
SALES UNITS (THERMS)
GAS UTILITY REVENUE
BASE SALES REVENUE:
COMMODITY SALES
DISTRIBUTION SALES
SUB -TOTAL BASE SALES REVENUE
RATE ADJUSTMENT:
COMMODITY
DISTRIBUTION
TOTAL RATE ADJUSTMENT
PRORATION IMPACT
7.1%
7.1%
1.51
31,468
-10.0% -13.5%
-9:3%
1:45
30,886
-9.3%
1.39
30,550
3.7%
0.0%
1.44
30,882
6.1% 3.5%
6.0% 4.0%
1.53 1.59
30,900 30,919
2.7%
3.0%
1.63
30,937
l` 2.7%
3.0%
1.67
30,956
R
E
v
E
N'
u
E'
s
4
5
6'
7
9
10;
11
12
13
14
15
16
17
18
1, 9t''
20
21
22
SUB -TOTAL ADJUSTED S&D SALES
DISCOUNTS/UNCOLLECTABLES
NET ADJUSTED SALES REVENUE
INTEREST
OTHER REVENUE/RECONCILE TO SAP/COBUG
FROM RESERVES
DISTRIBUTION RSR
SUPPLY RSR
24,312
19,709
44,021
3,436
0
3,436
(1 43)
47,314
(64)
47,249
1,614
(612)
29,126
20,001
49,126
(2,447)
(2,200)
(4,647)
194
44,673
(450)
44,223
1,010
693
27,309
19,721
47,030
(2,435)
(2,169)
(4.605)
192
42,617
(450)
42,167
1,010
1,806
25,986 23,094
17,743 21,712
43,729 44,806
(3.211)
3,957
745
(31)
44,443
(450) (450)
43,993 46,682
1,010 883
811 821
1,016
1,411
2,427
(101)
47,132
24,264
23,138
47,401
1,521
0
1,521
(63)
25,926
23,151
49,077
1,185
0
1,185
(49)
48,859 50,212
(450)
48,409
846
831
27,233
23,165
50,399
1,234
0
1,234
(J1)
51,581
(450)
51,131
854
824
289
0
0
1,275
0
0
808
2,686
0
886
906
0
(450)
49,762
785
841
0
0
0
0
TOTAL FINANCIAL RESOURCES
48,541
47,201
44;983
49,307
49,272
50,991
51,388 52,809
R
E
s
E
R
v
E
s
.OPggynN E SES
RESERVE FUNDING:
PLANT REPLACEMENT
DISTRIBUTION RSR
SUPPLY RSR
SUB -TOTAL RESERVE FUNDING
473
(328)
0
1,332
1,004
0
1,346
0
1,346
0
698
1,913
2,612
0
0
0
0
0
51
0
51
0
0
60
60
0
1,105
561
1,666
0
746
1,317
2,063
TOTAL REVENUE REQUIREMENT
48,541
47,201
44,983
49,307
49,272
50,991
51,388
52,809
RESERVES BALANCES
PLANT REPLACEMENT
DISTRIBUTION RSR
SUPPLY RSR
DEBT SERVICE RESERVE
TOTAL RESERVES BALANCES
1,000
4,449
8,733
952
15,134
Short Term Risk Assessment Value -Supply RSR 6,500
Short Term Risk Assessment Value- Distribution RSR 3,390
Long Term Rate Stabilization Guidelines
Supply RSR Minimum
Supply RSR Maximum
Distribution RSR Minimum
Distribution RSR Maximum
8,782
18,818
3,942
9,854
2'
4)
4
OPERATING EXPENSES
SUPPLY:
PURCHASES
OPERATIONS & MAINT., OTHER ADMIN.
ALLOCATED CHARGES:
COST PLAN CHARGES & OTHER
UTILITIES ADMINISTRATION
SUB -TOTAL SUPPLY
DISTRIBUTION:
CUSTOMER DESIGN &CONN. (CIP)
SYSTEM IMPROVEMENT (CIP)
OPERATIONS & MAINT., OTHER ADMIN.
ALLOCATED CHARGES'
COST PLAN CHARGES & OTHER
UTILITIES ADMINISTRATION
SUB -TOTAL DISTRIBUTION
TOTAL MAJOR ACTIVITIES
25,091
672
94
76
25,934
681
7,899
5,087
1,070
941
15,677
41,611
26,859
1,132
171
58
28,220
690
1,699
5,829
1,344
1,244
10,806
39,026
22,475
1,132
171
58
23,837
690
1,699
6,729
1,344
1,244
11,706
35,542
24,595
1,118
175
58
25,946
700
7,625
5,938
1,360
1,248
16,872
42,818
23,838
1,129
177
59
25,202
710
7,111
5,998
1,374
1,261
16,453
41,655
24,514
1,140
179
59
25,892
720
7,468
6,058
1,388
1,273
16,907
42,799
25,350
1,151
25,972
1,163
181 182
60 61
26,742 27,378
730 752
4,657 4,683
6,118 6,179
1,401 1,415
1,286 1,299
14,193 14,329
40,935
41,706
DEBT SERVICE
TRANSFERS:
GENERAL FUND TRANSFER
RENT
OTHER TRANSFER
SUB -TOTAL TRANSFER
949
3,135
205
1,638
4,978
947
5,300
215
367
5,882
947
5,300
215
367
5,882
947
4,930
215
396
5,542
948
6,003
218
396
6,618
948
6,567
221
396
7,184
948
7,218
224
396
7,838
948
7,468
227
396
8,091
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
1,000
5,792
7,456
952
5,199.
5,800
3,759
6,715
13,429
2,684
5,368
1,000
5,147
10,646
952
17,745
5,800
3,759
5,619
11,238
2,646
5,293
1,000
4,340
7,961
952
4,252
5,700
4,070
6,149
12,298
3,230
6,460
1,000
4,391
7,075
952
13,417;.
5,959
11,919
3,460
6,919
1,000
3,485
7,134
952
12,571
6,128
12,257
3,471
6,941
1,000
4,589
7,695
952
14,237 .
6,338
12,675
3,473
6,945
1,000
5,335
9,013
952
16,300
6,493
12,986
3,475
6,950
-; 2010.x:
Va0,1,1111,4
..-201;2
ATTACHMENT C
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: FEBRUARY 3, 2010
SUBJECT:
6
LONG TERM FINANCIAL PROJECTIONS AND REVENUE
REQUIREMENTS FOR THE ELECTRIC FUND
This report is for discussion purposes only. No action is required.
OVERVIEW
This report discusses the projected costs and revenue requirements for the Electric Fund for the
next five years starting Fiscal Year (FY) 2011 through FY 2015.
Staff assessed cost trends and projections, short term assessment of risks, and existing reserve
guidelines and determined the revenue requirements for the Electric Fund for the next five years.
Based on this analysis, staff's preliminary recommendation is for no revenue adjustment for FY
2011. Based on projections as of December 2009, the expected revenue adjustments for the
remaining four years of the forecast horizon are 8%, 8%, 4% and 0%, respectively. These rate
adjustments would achieve the goals of ensuring that the balances of the Electric Supply and
Distribution Rate Stabilization Reserves (E-SRSR and E-DRSR) can cover the short-term risk
assessment value and are between the Council -approved minimum and maximum guideline
levels for the long-term forecast horizon.
Staff will return to the UAC in March 2010 with rate adjustment proposals to be effective in July
2010. Despite the preliminary recommendation for no overall revenue adjustment, staff may still
propose rate structure changes that could impact customer bills, if warranted by the Cost of
Service studies that are underway and other City policy objectives.
BACKGROUND
The revenue requirements and resulting rate adjustment targets depend on a number of
components including sales revenue projections, distribution system operating and capital
improvement program (CIP) expenses, prudent rate stabilization and emergency plant
replacement reserves, and debt service payments. Any change in one or more of these
components can trigger a change, up or down, to the revenue requirement. During the budget
process, staff forecasts load, revenues and expenses to quantify the annual revenue requirement.
Page 1 of 5
DISCUSSION
Cost Drivers
Total expenses for the Electric Fund are projected to increase from their budgeted levels of
$130.2 million in FY 2010 to $149.2 million in FY 2015, a 15% increase in five years as shown
in Table 1 below.
Table 1
10
11
12
13
14
15
16
17
18
19
20
21
23
24
25
26
27
28
29
30
Five -Year Financial Plan - Pro ected Costs $ thousands
Fiscal Year
OPERATING EXrtNSEb
SUPPLY
PURCHASES
SURPLUS ENERGY COST
PA -GREEN POWER PURCHASES
DEBT SERVICES:
CAMERAS
SUPPLY FUNDED ALTERNATIVE RESOUR
SUPPLY RESOURCE, OTHER ADMIN
ALLOCATED CHARGES'
COST PLAN CHARGES & OTHER
UTILITIES ADMINISTRATION
SUB -TOTAL SUPPLY
DISTRIBUTION
OPERATIONS & MAINT, OTHER ADMIN
PUBLIC BENEFITS PROGRAMS
CUSTOMER DESIGN & CONNECTION CIP
SYSTEM IMPROVEMENT (GP)
STREET UGHT, TRAFFIC SIGNAL O&M
STREET LIGHT, TRAFFIC SIGNAL CIP
COMMUNICATIONS O&M & CIP
ALLOCATED CHARGES:
COST PLAN CHARGES & OTHER
UTILMES ADMINISTRATION
SUB -TOTAL DISTRIBUTION
TRANSFERS:
GENERAL FUND TRANSFER
RENT
OTHER TRANSFERS
TOTAL OPERATING EXPENSES
71,127
3,305
611
8,086
1
2,062
172
240
85,603
10,753
3,409
2,320
7,504
709
0
3,730
2,060
30,796
9,268
3,253
6,261
68,126
1,632
1,039
7,759
2,050
2,946
345
246
84,143
12,496
3,131
2,010
6,315
809
100
435
3,036
2,397
30,729
11,120
3,498
692
63,030
1,269
1,039
7,720
4,665
2,331
345
246
80,645
12,496
3,631
2,000
8,362
809
563
435
3,036
2,397
31,729
11,120
3,498
692
Projected
2011
64,030
1,967
1,080
8,849
2,165
2,342
356
247
81,037
12,558
3,576
2,100
8,070
809
800
440
3,066
2,406
33,826
11,530
3,498
819
71,068
2,623
1,134
8,855
2,571
2,365
360
249
89,225
12,684
3,338
2,200
10,645
818
800
448
3,097
2,430
36,459
12,065
3,533
819
135,200 130,182 127,684 130,710 142,102
143,894
69,971
1,939
1,191
8,987
2,781
2,389
363
252
87,873
12,811
3,610
2,300
8,912
826
800
456
3,128
2,454
35,297
12,493
3,568
819
060
70,856
2,318
1,250
9,076
3,294
2,413
367
254
89,828
12,939
3,765
2,400
9,925
834
800
465
3,159
2,479
36,765
12,877
3,604
819
76,396
2,426
1,313
9,079
4,011
2,437
370
257
96,288
13,068
3,841
2,450
9,425
842
800
473
3,191
2,504
36,594
13,311
3,640
819
The cost of purchases to serve load constitutes the largest cost item for the Electric Fund,
accounting for approximately half of total costs. This cost category includes the cost of buying,
scheduling and transmitting power to meet load and the cost of meeting local and state
requirements for reliability and renewable energy. The cost is highly uncertain as it is dependent
on hydrology and weather conditions, volatile market prices, and legislative and regulatory
requirements. The cost of purchases to serve load is projected to decrease from $71.1 million in
FY 2009 to $63.0 million in FY 2010. The expectation for FY 2011 is also around this level
($64.0 million) thus providing significant relief to electric customers. The five-year projection
of the cost of purchases to serve load is a gradual 4% annual average increase, ending at $76.4
million by FY 2015.
Other supply -related costs account for 14% of total costs in the Electric Fund. Of these,
PaloAltoGreen power purchases are budgeted at $1.0 million in FY 2010 and projected to
increase by 5% per year throughout the forecast horizon ending at $1.3 million in FY 2015. The
supply -funded alternative resource budget consists of energy efficiency and solar photovoltaic
Page 2 of 5
program -related incentives and other program costs funded through electric supply rates. These
funds are budgeted in addition to the legislated Public Benefits funds that are collected through
Public Benefits Charges, which are designated for energy efficiency and other legislated
programs. The combined Public Benefits and supply -funded alternative resource budget is
estimated to be $6.5 million in FY 2010. This includes the $2.0 million from Calaveras Reserve
to be used as seed money for the Energy Efficiency Financing Program for Businesses. The
combined budget is projected to increase from $5.7 million in FY 2011 to $7.9 million by FY
2015 as part of the planned update of the long-term Energy Efficiency Plan, which is planned for
discussion at the UAC's March 2010 meeting.
The Electric Fund's projected FY 2010 Distribution budget of $31.7 million accounts for 25% of
total costs in the Electric Fund. About 30% of this, or $8.9 million, is due to CIP-related
activities, which is expected to grow at 7% per year to total $12.7 million in FY 2015. The
remaining $22.8 million in the FY 2010 Distribution budget consists of operating expenses and
allocated charges, which together are expected to increase at 1% per year totaling $23.9 million
in FY 2015.
The remaining costs consist of transfers to the General Fund and other funds and rent, which
together account for 12% of total costs at $15.3 million in FY 2010. Rent is projected to increase
by 1% per year, other transfers are projected to remain constant and the General Fund Transfer is
projected to increase based on the Council -approved equity transfer methodology. Altogether,
these costs are projected to increase by 3% per year, totaling $17.8 million in FY 2015.
Required Reserve Levels and Revenue Requirements
Based on the City's Audited Financial Report (CAFR) for FY 2009, the E-SRSR ended the fiscal
year with a balance of $41.4 million and the E-DRSR ended the fiscal year with a balance of
$6.3 million. These levels are between the minimum and maximum reserve guideline levels and
above the annual risk assessment values of $33.8 million for the E-SRSR and $4.6 million for the
E-DRSR.
As of the end of FY 2010, the balance of the E-SRSR is projected to be $40.2 million and the
balance of the E-DRSR is projected to be $9.5 million. At these levels, both reserves are
expected to be within the minimum and maximum guideline levels as well as above the risk
assessment values for FY 2010.
Due to the higher than budgeted ending reserve levels projected for FY 2010, staff recommends
no change in the average retail rate for electric customers in FY 2011. Given the projections
outlined in this report, there may be additional rate adjustments necessary for the next two years
beyond the budget year at 8% for FY 2012 and FY 2013, and 4% for FY 2014. Staff projects
average retail rates not to exceed 14.0 cents per kWh by FY 2015.
Table 2 presents the projected financial resources available to the Electric Fund, revenue
requirements, required rate adjustments and RSR levels. Without a rate adjustment, both the
Supply and Distribution RSRs would have a balance much lower than minimum guideline levels
starting in FY 2012. With the projected rate adjustments, the Electric Fund remains financially
viable throughout the forecast horizon.
Page 3 of 5
Table 2
Five -Year Financial Plan - Projected Financial Resources, Revenue Requirements, Rate
Ad'ustments, and Reserve Levels
Fiscal Year
WITHOUT RATE ADJUSTMENTS
Total Sources of Funds
Total Uses of Funds
Intoi(Out of) Reserves
From Calaveras Reserves
Ending Supply RSR
Ending Distribution RSR
Ending Calaveras Reserve
RSR RESERVE GUIDELINES
Supply • ST Risk Assessed Value
Supply - LT Minimum Guideline
Supply LT Maximum Guideline
Distribution - ST Risk Assessed Value
Distribution - LT Minimum Guideline
Distribution - LT Maximum Guideline
REQUIRED RATE ADJUSTMENTS
% Change in System Average Rate
Projected Change in Retail Sales Revenue
From Calaveras Reserves
Ending Supply RSR
Ending Distribution RSR
Ending Calaveras Reserve
Actual
2009
130,487
142,497
(12,010)
10,086
41,607
6,342
64,535
33,800
35,455
70,910
4,588
6,654
16.636
14.1%
12.918
10,086
41,442
6,342
64,535
Adopted
2010
129,943
137,082
(7,134)
2,907
32.541
8,396
64,209
33,600
34,013
68,026
5,784
6,450
12,901
10.0%
10.338
2,907
32,541
8,396
64.209
Projected
2010
131,398
134,684
(3,286)
4.670
40,406
9,457
59,865
33,600
34,013
68,026
5,784
6,389
12,778
10.0'/,
10.212
4.670
40,241
9,457
59.865
Projected
2011
128,993
137,709
(8,715)
4,108
37,768
7,967
55,757
26,700
32,015
64,030
6,934
6,355
12.710
35,534
34,986
35.428
38.198
0.0%
4,108
37.603
7,967
55.757
2012
130,307
148,862
(18,555)
3,597
27,030
3,748
52,160
71,068
6,694
13,387
8.0%
8,956
3.597
33,090
5,859
52,160
2013
129,028
146,540
(17,512)
2,460
15,585
141
49,700
69,971
7,050
14,101
8.0%
9,694
2,460
34,690
7,282
49.70
2014
129,680
150,231
(20,551)
2,280
2,409
(4,954)
47,420
70,856
7,059
14,118
4.0%
5,240
2.280
40,253
7,541
47.420
2015
131,174
156,972
(25,797)
2,188
(16,563)
(9,591)
45,232
76,396
7,191
14.383
0.0%
2,188
41.323
8,566
45.232
Customer Bill Impact
There will be no change to an average residential customer's monthly utility bill in FY 2011 due
to revenue requirements identified in this report. However, there could be bill impacts due to
structural rate changes which may be proposed when staff returns with rate proposals for the
UAC's consideration at its March 2010 meeting.
Rate Comparison with Neighboring Cities
The City currently has a cost advantage with respect to the electric utility costs in comparison
with neighboring cities served by the Pacific Gas and Electric Company. However, Santa Clara,
served by Silicon Valley Power, has rates that result in a lower bill for the average residential
customer. Table 3 below presents the average residential customer's monthly bill for four
neighboring cities using current rates. Comparisons are based on an average usage of 650 kWh
per month. Monthly bills are based on the most recently posted rates in each jurisdiction.
Page 4 of 5
Table 3
Electric Utility Residential Benchmark Comparison
Current FY 2010 (as of January 1, 20.10)
The required revenue increases discussed in this report may impact the City's current relative
position depending on future financial decisions by the electric utilities that serve the cities
compared here.
ATTACHMENT
Five -Year Revenue Projections for the Electric Fund
PREPARED BY: ERIC KENISTON, Associate Resource Planner
IPEK CONNOLLY, Senior Resource Planner
REVIEWED BY:
NE RATCHYE
ssistant Director, Resource Management
DEPARTMENT HEAD:
VALERI$J O. F� fDNG
Director of Utilities
Page 5 of 5
Actual Adopted
Fiscal Year 2009 2010
Projected Projected
2010 2011
2012 2013
2014 2015
2
3
% CHANGE IN RETAIL RATE
TOTAL AVERAGE RATE (MILLS/KM)
SALES UNITS (GM)
ELECTRIC FUND REVENUE
BASE SALES REVENUES:
COMMODITY SALES
DISTRIBUTION SALES
PUBLIC BENEFIT REVENUE
SUB -TOTAL BASE SALES REVENUE
RATE ADJUSTMENT:
COMMODITY
DISTRIBUTION
PUBLIC BENEFIT
TOTAL RATE ADJUSTMENT
PRORATION IMPACT
14.1%
105
996
10.0%
116
981
10.0%
116
972
0.0% .,.
116
967
8.0%
125
968
8.0%
135
969
4.0%i 0.0%
140 140
970 988
R
E
V
E`
N;
u
4
5
6
7
8,
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
22
23
24
25
26
27
28
56,501
33,271
2,485
92,257
12,633
0
285
12,918
(538)
67,266
32,952
2,854
103,072
0
10,050
288
10,339
(431)
66,626
32,638
2,854
102,118
0
9,955
257
10,212
(425)
66,273
42,367
3,095
111,735
0
0
(0)
66,354
42,419
3,100
111,873
6,503
2,206
248
8,957
(373)
72,946
44,679
3,352
120,978
6,565
2,859
269
9,693
(404)
79,609 86,293
47,597 48,490
3,625 3,841
130,831 138,624
5,095 0
0 0
145 0
5,240 0
(218)I (0)
TOTAL ADJUSTED BASE SALES REVENUE
DISCOUNTS/UNCOLLECTABLES
INTEREST
SURPLUS ENERGY REVENUE
PA -GREEN SALES REVENUE
OTHER REVENUE
STREET LIGHT, TRAFFIC SIGNAL CIF REIMS
TELECOMMUNICATION REVENUE
FROM RESERVES:
SUPPLY RSR
DISTRIBUTION RSR
CALAVERAS
P.B. RESERVE
CVP CUSTOMER O&M FUNDING
104,637
(374)
7,712
3,312
851
7,174
0
0
5,702
1,768
10,086
0
7,174
112,980 111,905
(260)
5,024
2,566
1,039
1,595
0
0
8,966
0
2,907
0
7,000
(260)
5,024
1,625
1,039
4,602
463
0
1,201
0
4,670
530
7,000
111,736
(260)
5,024
2,759
1,084
1,650
0
0
2,638
1,489
4,108
480
7,000
120,457
(260)
4,427
3,717
1,139
2,405
0
0
4,513
2,108
3,597
0
7,000
130,267
(260)
4,018
3,231
1,196
2,160
0
0
0
0
2,460
0
7,000
135,853 138,624
(260)
4,041
4,051
1,255
2,495
0
(260)
4,182
4,116
1,318
2,580
0
0
0 0
0 0
2,280 2,188
0 0
7,000 7,000
TOTAL FINANCIAL RESOURCES
OPERATING EXPENSES
SUPPLY
PURCHASES
SURPLUS ENERGY COST
PA -GREEN POWER PURCHASES
DEBT SERVICES:
CALAVERAS
SUPPLY FUNDED ALTERNATIVE RESOUR(
SUPPLY RESOURCE, OTHER ADMIN
ALLOCATED CHARGES:
COST PLAN CHARGES & OTHER
UTILITIES ADMINISTRATION
SUB -TOTAL SUPPLY
DISTRIBUTION
OPERATIONS & MAINT, OTHER ADMIN
PUBLIC BENEFITS PROGRAMS
CUSTOMER DESIGN & CONNECTION CIP
SYSTEM IMPROVEMENT (CIP)
STREET LIGHT, TRAFFIC SIGNAL O&M
STREET LIGHT, TRAFFIC SIGNAL CIP
COMMUNICATIONS O&M & CIP
ALLOCATED CHARGES:
COST PLAN CHARGES & OTHER
UTILITIES ADMINISTRATION
SUB -TOTAL DISTRIBUTION
TRANSFERS:
GENERAL FUND TRANSFER
RENT
OTHER TRANSFERS
148,043
141,817
137,799
137,709
149,102
150,072
156,715 159,749
E
X
P
E
N
s
E
s
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
23
24
25
26
27
28
29
30
31
71,127
3,305
611
8,086
1
2,062
172
240
85,603
10,753
3,409
2,320
7,504
709
0
308
3,730
2,060
30,796
9,268
3,253
6,281
68,126
1,632
1,039
7,759
2,050
2,946
345
246
84,143
12,496
3,131
2,010
6,315
809
100
435
3,036
2,397
30,729
11,120
3,498
692
63,030
1,269
1,039
7,720
4,665
2,331
345
246
80,645
12,496
3,631
2,000
6,362
809
563
435
3,036
2,397
31,729
11,120
3,498
692
64,030
1,967
1,080
8,849
2,165
2,342
356
247
81,037
12,558
3,576
2,100
8,070
809
800
440
3,066
2,406
33,826
11,530
3,498
819
71,068
2,623
1,134
8,855
2,571
2,365
360
249
89,225
12,684
3,338
2,200
10,645
818
800
448
3,097
2,430
36,459
12,065
3,533
819
69,971
1,939
1,191
8,987
2,781
2,389
363
252
87,873
12,811
3,610
2,300
8,912
826
800
456
3,128
2,454
35,297
12,493
3,568
819
70,856
2,318
1,250
9,076
3,294
2,413
367
254
89,828
12,939
3,765
2,400
9,925
834
800
465
3,159
2,479
36,765
12,877
3,604
819
76,396
2,426
1,313
9,079
4,011
2,437
370
257
96,288
13,068
3,841
2,450
9,425
842
800
473
3,191
2,504
36,594
13,311
3,640
819
TOTAL OPERATING EXPENSES
135,200
130,182
127,684
130,710
142,102
140,050
143,894 150,653
1/25120109:02 AM
Actual
Fiscal Year 2009
Adopted
2010
RESERVE FUNDING:
PLANT REPLACEMENT
SUPPLY RSR
DISTRIBUTION RSR
P.B. RESERVE
CALAVERAS INTEREST
TOTAL RESERVE FUNDING
CVP CUSTOMER 0&M FUNDING
RECONCILE TO SAP & OTHER
(2:057)
0
0
2,171
4,224
4,336
7,306
1,202
TOTAL REVENUE REQUIREMENT 148,043
0
0
2,054
0
2,581
4,636
7,000
0
Projected
2010
0
0
3,115
0
0
3,115
7,000
0
Projected
2011
2012 2013 2014 2015
0
0
0
0
0
0
6,999
0
0
0
0
0
0
0
7,000
0
1,600
1,422
0
0
3,022
7,000
0! 0
0 0
5,563 1,070
259 1,026
0 0
0 0
5,822 2,096
7,000 7,000
0 0
141,817 137,799 137,709
149,102
150,072 156,715 159,748
R
E
s
E
R
V
E
s
RESERVES BALANCES
PLANT REPLACEMENT
DISTRIBUTION RSR
SUPPLY RSR
CALAVERAS
P.B. RESERVE BALANCE
49 TOTAL RESERVES BALANCE
50
51
33,800
Short Term Risk Assessment Value -Supply RSR
Short Term Risk Assessment Value- Distribution R:
Long Term Rate Stabilization Guidelines
Supply RSR Minimum
Supply RSR Maximum
Distribution RSR Minimum
Distribution RSR Maximum
1,000
6,342
41,442
64,535
4,280
4,588
35,455
70,910
6,654
16,636
1,000
8,396
32,641
64,209
4,280
110,526
1,000
9,457
40,241
59,865
3,750
114,313,
1,000
7,967
37,603
55,757
3,270
105,598
1,000
5,859
33,090
52,160
3,270
95,381
1,000
7,282
34,690
49,700
3,270
95,942 99484 - 99,392
1,000
7,541 ,
40,253
47,420
3,270
1,000
8,566
41,323
45,232
3,270
33,600
5,784
34,013
68,026
6,450
12,901
33,600
5,784
34,013
68,026
6,389
12,778
26,700
6,934
32,015
64,030
6,355
12,710
35,534
71,068
6,694
13,387
34,986
69,971
7,131
14,262
35,428 38,198
70,856 76,396
7,140 7,274
14,279 14,547
1/25/20109:02 AM
ATTACHMENT D
MEMORANDUM
3
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: MARCH 9, 2010
SUBJECT: LONG TERM FINANCIAL PROJECTIONS AND REVENUE
REQUIREMENTS FOR THE WASTEWATER COLLECTION FUND
This report is for discussion purposes only. No action is required.
OVERVIEW
This report discusses the projected costs and revenue requirements for the Wastewater Collection
Fund for the next five years starting Fiscal Year (FY) 2011 through FY 2015.
Staff assessed cost trends and projections, short-term assessment of risks, and existing reserve
guidelines and determined the revenue requirements for the Wastewater Collection Fund for the
next five years. Based on this analysis, staff's preliminary recommendation is for no revenue
adjustment for FY 2011. Based on projections as of December 2009, the expected revenue
adjustment for the remaining four years of the forecast horizon is an annual increase of 5% per
year. These rate adjustments would achieve the goals of ensuring that the balance of the
Wastewater Rate Stabilization Reserve (WW RSR) can cover the short-term risk assessment
value and are between the Council -approved minimum and maximum guideline levels for the
long-term forecast horizon.
Despite the preliminary recommendation for no overall revenue adjustment, staff may still
propose rate structure changes that could impact customers, if warranted by the Cost of Service
studies that are underway and in line with other City policy objectives.
BACKGROUND
The revenue requirements and resulting rate adjustment targets depend on a number of
components including revenue projections, treatment costs, collection system operating and
capital improvement program (CIP) expenses, prudent rate stabilization and emergency plant
replacement reserves, and debt service payments. Any change in one or more of these
components can trigger a change, up or down, to the revenue requirement. During the budget
process, staff forecasts load, revenues and expenses to quantify the annual revenue requirement.
•
Page 1 of 4
DISCUSSION
Cost Drivers
Total expenses for the Wastewater Collection Fund are projected to increase from their budgeted
levels of $16.4 million in FY 2010 to $17.9 million in FY 2015, a 2.9% average annual increase
as shown in Table 1 below.
Table 1
Five -Year Financial Plan - Pro'ected Costs
Actual Adopted Protected Protected
Fiscal Year 2009 2010 2010 2011
2012
2013
2014
2015
E
X
P
E
N
s
E
s
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
OPERATING EXPENSES
TREATMENT
CUSTOMER DESIGN & CONN. (cIP)
SYSTEM IMPROVEMENT (CIP)
CUSTOMER SERVICES
OPERATIONS
ALLOCATED CHARGES:
COST PLAN CHARGES & OTHER
UTILITIES ADMINISTRATION
TOTAL MAJOR ACTIVITIES
6,131
1,121
3,750
301
2,460
(171)
749
7,933
961
2,985
289
2,529
655
689
7,933
961
2,985
289
2,529
655
689
7,588
890
3,270
289
2,561
664
691
7,892
905
3,366
292
2,587
670
698
8,207
920
3,467
295
2,613
677
705
8,536
978
3,571
298
2,639
684
712
8,877
1,008
3,678
301
2,665
691
720
14,342
16,041
16,041
15,954
16,410
16,884
17,418
17,939
DEBT SERVICE
TRANSFERS:
OPERATING TRANSFERS OUT
RENT
SUB -TOTAL TRANSFER
129
712
109
821
129
97
115
211
129
97
115
211
129
565
115
679
129
565
116
680
129
565
117
682
129
565
118
683
129
565
119
684
TOTAL OPERATING EXPENSES
15,291
16,381
16,381
16,762
17,219
17,695
18,229
18,752
Treatment costs account for almost half of the total costs, or $7.9 million in FY 2010 and are
projected to increase by 2.4% per year reaching $8.9 million in FY 2015. Operations cost is
projected to increase by 1.0% annually. Annual CIP costs are projected to increase at a higher
rate of 3.8% annually based on planned project schedules as the Wastewater Collection Utility
continues its system replacement projects. Other cost items such as debt service payments and
rent do not constitute a major expense category for the Wastewater Collection Fund and are
assumed to either remain flat (debt service payments) or increase by 1.0% annually (rent).
Financial Resources, Required Reserve Levels and Revenue Requirements
Based on the City's Annual Financial Report (CAFR) for FY 2009, the WW-RSR ended the
fiscal year with a balance of $6.0 million. This is below the maximum reserve guideline level of
$6.9, and above both the minimum reserve guideline level of $2.8 million and the annual risk
assessment value of $1.8 million.
Following a 5% rate increase implemented on July 1, 2009, as of the end of FY 2010, the balance
of the WW-RSR is projected to be $5.6 million, between the minimum and maximum guideline
levels.
Due to the high ending reserve levels expected for FY 2010, staff recommends no change in the
system average retail rate in FY 2011. Based on the five-year financial plan, rate projections for
the next four years of the forecast horizon show annual increases of 5% for the next four years
starting in FY 2012.
Page 2 of 4
Table 2 presents the projected financial resources available to the Wastewater Collection Fund,
revenue requirements, required rate adjustments and WW-RSR levels. Without a rate adjustment
over the five-year planning horizon, the WW-RSR would have a balance lower than minimum
guideline level starting in FY 2013. With the projected rate adjustments, the Wastewater
Collection Fund remains financially viable throughout the forecast horizon.
Table 2
Revenue Re uirements and Rate Ad'ustment Scenarios
A B'
Actual Adopted
2009 2010
WITHOUT RATE ADJUSTMENTS
Total Sources of Funds
Total Uses of Funds
Into/(Out of) Reserves
ST Risk Assessed Value
LT Minimum Guideline
LT Maximum Guideline
1,698
2,752
6,881
REQUIRED RATE ADJUSTMENTS
% Change in System Ave
Change in Retail Sales Ri
Ending RSR
0.0%
6,023
1,710
2,156
4,311
5.0%
684
4,265
1,710
2,156
4,311
5.0%
684
5,629
1,815
2,156
4,311
0.0%
4,898
2,263
4,527
5.0%
719
4,326
2,377
4,753
5.0%
754
4,037
2,495
4,991
2,620
5,241
Customer Bill Impact
There will be no change on an average residential customer's monthly utility bill in FY 2011 due
to revenue requirements identified in this report unless structural rate changes are proposed or
cost shifts between rate classes are proposed based on the Cost of Service study that is underway.
Rate Comparison with Neighboring Cities
The City currently has lower wastewater costs than two neighboring cities as shown in Table 3
below. Monthly bills shown in the table are based on the most recently posted rates for each
jurisdiction.
Table 3
Wastewater Utility Residential Benchmark Comparison
Current (as of January 1, 2010)
Page 3 of 4
The City's current relative position with respect to neighboring cities may change in the future
depending on future financial decisions by all cities compared here.
ATTACHMENT
Five -Year Financial Projections for the Wastewater Fund
PREPARED BY: ERIC KENISTON, Associate Resource Planner
IPEK CONNOLLY, Senior Resource Planner
REVIEWED BY:
RATCHYE
sistant Director, Resource Management
DEPARTMENT HEAD:
VALERIEVO.
Director of Utilities
Page 4 of 4
Fiscal Year'
Actual
2009
, Adopted
2010
1 Projected
? 2010
Projected
2011
2012
ATTACHMENT
2013
A
2014 1 2015
% 1•Atlr3E iN RETAIL4601 1 ".
.. O 0%
54%
' ' .: 5.0%
' 010°/
5.O%
9.0
i
- ,5.0%1 5.0%
2,:
WASTEWATER REVENUE I
1
3
REVENUE:
13,762
13,687
13,687
14,371
14,371
15,090
15,844 1 16,637
4
RATE ADJUSTMENT
0
684
684
0
719
754
792 1 832
PRORATION IMPACT j
0
(29)
(29)1
0
(30)
(31)
(33)1 (35)
V
$'..
TOTAL ADJUSTED REVENUE 1
13,762
i 14,343
1 14,343
14,371
15,060
15,813
16,604 17,434
E•,;
7;
DISCOUNTS/UNCOLLECT.
(18)
(15)
(15)
(15)
(15)
(15)
(15)1 (15)
N '
b`'
INTEREST
805
552
552
552
469
465
474 495
9
tO
10
CONNECTION AND CAPACITY FEES
OTHER/TRANSFERS IN
i
601
257
721
387
721
387
730
393
740
393
750
393
761 771
393 393
11
FROM RESERVES:
RATE STABILIZATION
i
4
393
393
731
572
289
13
0
13
"OTAI. FINAN L 18 ItcEs
15,410
. 16,381
16,38.1
16,762
.. ...17,219.,.:...17,69ix,
18,229
19,08
14
OPERATING EXPENSES
15
TREATMENT i
6,131
7,933
7,933
7,588
7,892
8,207
8,536 8,877
16
CUSTOMER DESIGN & CONN. (CIP) i
1,121
961
961
890
905
920
978 j 1,008
E
17
SYSTEM IMPROVEMENT (CIP)
3,750
2,985
2,985
3,270
3,366
3,467
3,571 j 3,678
X
18
CUSTOMER SERVICES
301
289
289
289
292
295
298 301
P
19
OPERATIONS
2,460
2,529
2,529
2,561
2,587
2,613
2,639 2,665
20
ALLOCATED CHARGES:
E
21
COST PLAN CHARGES & OTHER
(171)
655
655
664
670
677
684 691
N
22
UTILITIES ADMINISTRATION
749
689
689
691
698
705
712
720
S
23
24
TOTAL MAJOR ACTIVITIES 1
14,342
16,041
16,041
15,954
16,410
16,884
17,418
17,939
DEBT SERVICE
129
129
129
129
129
129
129
129
E
25
TRANSFERS:
S
26
OPERATING TRANSFERS OUT
712
97
97
565
565
565
565
565
27
RENT 1
109
115
115
115
116
117
118
119
28
SUB -TOTAL TRANSFER
821
211
211
679
680
682
683
684
29
TOTAL OPERATING EXPENSES 1
15,291
16,381
16,381
16,762
17,219
17,695
18,229
18,752
30
RESERVE ADDITIONS:
31
PLANT REPLACEMENT
119
0
0
0
0
0
0 0
32
RATE STABILIZATION
0
0
0
0
0
0
0 326
33
TOTAL RESERVE ADDITIONS:
119
0
0
0
0
0
0 I 326
34
TOTAL REVENUE REQUIREMENT
15,410
16,381
16,381
16,762
17,219
17,695
18,229
19,078
35
RESERVES BALANCES
R
36
PLANT REPLACEMENT
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
E
37
RATE STABILIZATION
6,023
4,265
5,629
4,898
4,326
4,037
4,024
4,349
S
38 r ,,
E
39
1,8,15
R
40
41
Short Term Risk Assessment Value
1,698
1,710
1,710
V
42
Long Term Rate Stabilization Guidelines
E
43
RSR Minimum 1
2,752
2,156
2,156
2,156
2,263
2,377
2,495
2,620
S
44
RSR Maximum I
6,881
4,311
4,311
4,311
4,527
4,753
4,991
5,241
45
ATTACHMENT E
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: MARCH 9, 2010
SUBJECT: UPDATED LONG TERM FINANCIAL PROJECTIONS AND REVENUE
REQUIREMENTS FOR THE WATER FUND
This report is for discussion purposes only. No action is required.
BACKGROUND
Staff presented long term financial projections and revenue requirements for the Water Fund for
the next five years to the UAC at its February 2010 meeting. At that time, staff presented a
preliminary rate increase for FY 2011 of 5% despite having projected reserve levels in excess of
the maximum guideline level due to the fact that wholesale water costs were projected to rise in
the future and the desire to minimize future rate increases.
The UAC requested staff develop a no revenue adjustment scenario for FY 2011 as an alternative
for consideration. Staff also received updated wholesale water supply cost projections from San
Francisco Public Utilities Commission since the February 2010 UAC meeting. The information
presented in this report incorporates this update to the water supply purchase costs.
DISCUSSION
Based on the updated water supply cost projections, staff's preliminary recommendation is for no
revenue adjustment for FY 2011 for the Water Fund. The expected revenue adjustment for the
remaining four years of the forecast horizon are annual increases of 7%, 7%, 8% and 8% for the
next four years starting in FY 2012. These rate adjustments would achieve the goals of ensuring
that the balance of the Water Rate Stabilization Reserve (W-RSR) can cover the short-term risk
assessment value and are between the Council -approved minimum and maximum guideline
levels for the long-term forecast horizon.
Despite the preliminary recommendation for no overall revenue adjustment, staff may still
propose rate structure changes that could impact customers, if warranted by the Cost of Service
studies that are underway and in line with other City policy objectives.
Page 1 of 3
The tables below and the attached financial forecast have been updated with the new wholesale
water supply cost projections.
Cost Drivers
Total expenses for the Water Fund are projected to increase from their budgeted levels of $50.7
million in FY 2010 to $57.0 million in FY 2015 as shown in Table 1 below.
Table 1
Five -Year Financial Plan - Projected Costs (in $thousands)
Actual Adopted Projected Projected
Fiscal Year 2009 2010 2010 2011 2012
2013
2014
2015
E
X
P
E
N
s
E
s
2
3
4
5
6
7
8
9
OPERATING EXPENSES
PURCHASES
CUSTOMER DESIGN & CONN. (CIP)
SYSTEM IMPROVEMENT(CIP) - Nonbond
SYSTEM IMPROVEMENT(CIP) - Bond
OPERATIONS, & MAINT, OTHER ADMIN.
ALLOCATED CHARGES:
COST PLAN CHARGES & OTHER
UTILITIES ADMINISTRATION
8,443
343
6,562
8,200
6,203
507
1,123
10,354
400
4,514
22,500
7,385
1,106
1,346
10,354
400
4,714
22,500
7,460
1,106
1,346
11,751
410
4,938
3,500
7,569
1,134
1,350
13,091
420
5,059
0
7,644
1,146
1,363
16,907
430
5,182
0
7,721
1,157
1,377
17,783
440
4,563
8,000
7,798
1,169
1,391
20,013
450
4,656
16,000
7,876
1,180
1,405
10
TOTAL MAJOR ACTIVITIES
31,380
47,604
47,879
30,652
28,724
32,774
41,144
51,581
11
12
13
14
15
16
DEBT SERVICE
TRANSFERS:
GENERAL FUND TRANSFER
RENT
OTHER TRANSFER
SUB -TOTAL TRANSFER
776
2,667
1,919
987
5,573
775
0
2,107
258
2,365
5,295
0
2,107
258
2,365
2,373
0
2,107
223
2,331
2,734
0
2,128
225
2,354
2,741
0
2,150
228
2,377
2,753
0
2,171
230
2,401
2,762
0
2,193
232
2,425
17
TOTAL OPERATING EXPENSES
37,730
50,744
55,539
35,355
33,811
37,892
46,297
56,767
Financial Resources, Required Reserve Levels and Revenue Requirements
Based on the City's Audited Financial Report (CAFR) for FY 2009, the W-RSR ended the fiscal
year with a balance of $5.4 million. This is slightly above the minimum reserve guideline level
of $5.3 million and well above the annual risk assessment value of $3.5 million. The balance of
the W-RSR is projected to be $10.3 million at the end FY 2010. While this is slightly above the
maximum reserve guidelines of $8.0 million, staff recommends no revenue adjustment for FY
2011 and then annual rate adjustments of 7% for FY 2012 and FY 2013 followed by increases of
8% per year in FY 2014 and FY 2015 in order to achieve a gradual increase of revenue to fund
the expected operating expenses facing the Water Fund.
Table 2 presents the updated projected financial resources available to the Water Fund, revenue
requirements, required rate adjustments and W-RSR levels. Without a rate adjustment, the W-
RSR would have a balance much lower than minimum guideline levels starting in FY 2013. With
the projected rate adjustments, the Water Fund remains financially viable throughout the forecast
horizon.
Page 2 of 3
Table 2
Updated Five -Year Financial Plan - Projected Financial Resources and Revenue
Requirements
1
WITHOUT RATE ADJUSTMENTS
Fiscal Year
Actual
2009
Adopted
2010
Projected
2010
Projected
2011
2012
31,069
34,976
(3,907)
30,824
38,199
(7,374)
38,944
48,078
(9,134)
47,033
57,997
(10,964)
2013
2014
2015
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Total Sources of Funds
Total Uses of Funds
Into/(Out of) Reserves
Ending RSR
RSR RESERVE GUIDELINES
29,474
37,780
(8,306)
5,400
66,026
50,819
15,207
14,089
66,297
55,539
10,757
10,282
34,673
35,657
(985)
9,297
5,391
(1,984)
(11,117)
(22,081)
ST Risk Assessed Value
LT Minimum Guideline
LT Maximum Guideline
3,541
5,303
13,258
3,765
4,330
8,660
3,765
4,330
8,660
4,168
4,300
8,600
4,671
9,342
5,003
10,007
5,409
10,818
5,847
11,695
REQUIRED RATE ADJUSTMENTS
% Change in System Average I
Change in Retail Sales Revenu
Ending RSR
8.0%
1,981
5,400
5.0%
1,375
14,089
5.0%
1,375
10,282
0.0%
9,599
7.0%
2,037
8,952
7.0%
2,182
6,348
8.0%
2,671
6,485
8.0%
2,888
7,609
ATTACHMENT
A. Updated Five -Year Financial Projections for the Water Fund
PREPARED BY:
REVIEWED BY:
DEPARTMENT HEAD:
ERIC KENISTON, Associate Resource Planner
IPEK CONNOLLY, Senior Resource Planner
ttit
E RATCHYE
sistant Director, Resource Management
VALERIFYO. i 1NG
Director of Utilities
Page 3 of 3
Fiscal Year
v
Actual
2009
-
Adopted
2010
Projected
2010
Projected
2011
2012
2013
A0% TTAC8Hb%e
2014
-
MENT'8.0%
2015
1
',CHANGE IM, 0iiiL TE
$,1i%
s0%
S 0%
0.0%
7 > O%
7. >
2,
SYSTEM AVERAGE RATE ($/CCF)
4.96
5.21
5.21
5.21
5.57
5.96
6.44
6.95
3,,,
SALES UNITS (CCFs)
5,395
5,543
5,543
5,504
5,588
5,594
5,600
5,605
4
WATER UTILITY REVENUE
,
5
SALES REVENUE:
24,757
27,493
27,494
28,666
29,104
31,174
33,388
36,095
R
6
RATE ADJUSTMENT
1,981
1,375
1,375
0
2,037
2,182
2,671
2,888
7"
PRORATION IMPACT
(83)
(57)
(57)
0
(85)
(91)
(111)
(120)
8 .
TOTAL ADJUSTED SALES
26,655
28,810
28,811
28,666
31,057
33,265
35,948
38,862
9
UNMETERED SALES/OTHER
(127)
138
138
138
138
138
138
138
10
INTEREST
1,788
1,265
1,265
1,265
853
757
1,206
1,737
M
11
OTHER REVENUE
275
131
334
337
341
344
8,348
16,351
CONNECTION FEES
833
682
749
767
776
785
795
804
93
FROM RESERVES:
14 RATE STABILIZATION
7,711
0
0
683
647
2,604
0
0
CIP BOND PROCEEDS
0
35,000
35,000
3,500
0
0
0
0
1 ' OTAL CI ► , (RESOURCE .
37,135:
66,026
,.. 66,297
;35,355
33,811
37,892'
46,434
57,891
OPERATING EXPENSES
PURCHASES
8,443
10,354
10,354
11,751
13,091
16,907
17,783
20,013
CUSTOMER DESIGN & CONN. (CIP)
343
400
400
410
420
430
440
450
SYSTEM IMPROVEMENT(CIP)- Nonbond
6,562
4,514
4,714
4,938
5,059
5,182
4,563
4,656
SYSTEM IMPROVEMENT(CIP) - Bond
8,200
22,500
22,500
3,500
0
0
8,000
16,000
OPERATIONS, & MAINT, OTHER ADMIN.
6,203
7,385
7,460
7,569
7,644
7,721
7,798
7,876
ALLOCATED CHARGES:
COST PLAN CHARGES & OTHER
507
1,106
1,106
1,134
1,146
1,157
1,169
1,180
UTILITIES ADMINISTRATION
1,123
1,346
1,346
1,350
1,363
1,377
1,391
1,405
TOTAL MAJOR ACTIVITIES
31,380
47,604
47,879
30,652
28,724
32,774
41,144
51,581
DEBT SERVICE
776
775
5,295
2,373
2,734
2,741
2,753
2,762
TRANSFERS:
GENERAL FUND TRANSFER
2,667
0
0
0
0
0
0
0
RENT
1,919
2,107
2,107
2,107
2,128
2,150
2,171
2,193
OTHER TRANSFER
987
258
258
223
225
228
230
232
SUB -TOTAL TRANSFER
5,573
2,365
2,365
Z331
2,354
2,377
2,401
2,425
34
RESERVE ADDITIONS:
35
PLANT REPLACEMENT
(595)
0
0
0
0
0
0
0
36 RATE STABILIZATION
0
10,982
4,882
0
0
0
137
1,124
37 DEBT SERVICE RESERVE
0
4,300
5,875
0
0
0
0
0
38 TOTAL RESERVE ADDITIONS:
(595)
15,282
10,757
0
0
0
137
1,124
39 TOTAL REVENUE REQUIREMENT
37,135
66,026
66,297
35,355
33,811
37,892
46,434
57,891
40 RESERVES BALANCES
41 PLANT REPLACEMENT
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
R
42 RATE STABILIZATION
5,400
14,089
10,282
9,599
8,952
6,348
6,485
7,609
E
43 CIP DEBT SERVICE
780
5,080
6,655
3,155
3,155
3,155
3,155
3,155
S
44 �y z
t 0
VW
1,1 �...
E
45
R
46 Short Term Risk Assessment Value
3,594
3,765
3,765
4,168
V
47
E
48 Long Term Rate Stabilization Guidelines
S
49 RSR Minimum
50 RSR Maximum
5,303
13,258
4,330
8,660
4,330
8,660
4,300
8,600
4,671
9,342
5,003
10,007
5,409
10,818
5,847
11,695
51