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Foothill MWD Preliminary Budget Presentation
May 20, 2013
Points to Consider
Equity issue with agencies leasing water and shifting costs to other agencies
Capital costs equity issue, peaks and valleys and total long-term costs
2May 20, 2013
Outline Process and Overview MWD Rates and Charges Energy Charges Preliminary O&M Projected Reserves Preliminary CIP PAYG and Financing Options Next Steps
3May 20, 2013
Process
April 15 – Reviewed w/ member agencies April 22 – Reviewed w/ Finance Committee May 8 – Reviewed w/ member agencies May 15 – Reviewed w/ member agencies May 20 – Board Workshop June 5 – Review w/ member agencies June 7 – Review w/ Finance Committee June 12 – Review w/ member agencies June 17 – Recommendations to Board
May 20, 20134
Overview
Pass-thru MWD rates and charges. Pass-thru energy costs. Keep Admin and O&M costs same. Replenish reserve due to payment to
CalPERS. Continue with CIP to rehabilitate system. Review/adjust method for charges. Obtain financing for capital and rehab. Based on 7,975 AF sales (from agencies).
5May 20, 2013
MWD Rates – Pass-ThruJan. 1, 2012 Jan. 1, 2013 Jan. 1, 2014
Tier 1 ($/AF) $794 $847 $890
Tier 2 ($/AF) $920 $997 $1,032
Readiness-to-Serve Charge ($Millions)
$146 $142 $166
Capacity Charge ($/cfs)
$7,400 $6,400 $8,600
Replenishment ($/AF)
$651 $0 $0
6May 20, 2013
MWD Preliminary RTS Charge
7
No provision if District owes more. Will need to bill agencies.
May 20, 2013
AGENCY
CY 2013 Monthly Charge
Preliminary
CY 2014 Monthly Charge Difference
CVWD $9,529 $11,933 $2,405 LCID $11,622 $14,903 $3,281 LFWC $2,798 $3,486 $688 LAWC $5,825 $6,854 $1,029 MCWC $3,025 $3,888 $863 RCLWA $3,334 $3,781 $446 VWC $11,152 $14,561 $3,408 FMWD $47,285 $59,406 $12,121
MWD Capacity Charge
Peak day = July 15, 2010 at 20.2 cfs$8,600/cfs charge prorated up to the 20.2 cfs equates to $9,870/cfs
Preparing for CPP event, responding to two mechanical failuresAnd two short notices for flow changes
8May 20, 2013
Agency
Flow for CY 2014 Charge
Percentage of Flow for
CY 2014 Charge
CY 2014 Annual Charge
Flow for CY 2013 Charge
Percentage of Flow for
CY 2013 Charge
CY 2013 Annual Charge
Annual Increase or (Decrease) in Charge
CVWD 3.4 19% 33,560$ 6.1 27% 41,427$ (7,867)$ LCID 4.9 28% 48,365$ 6.5 28% 44,143$ 4,222$ LFWC 0.9 5% 8,883$ 0.9 4% 6,112$ 2,771$ LAWC 3.7 21% 36,521$ 4.3 19% 29,202$ 7,318$ MCWC 1.4 8% 13,819$ 1.7 7% 11,545$ 2,273$ RCLWA - 0% -$ - 0% -$ -$ VWC 3.3 19% 32,573$ 3.4 15% 23,090$ 9,482$ Total 17.6 100% 173,720$ 22.9 100% 155,520$ 18,200$
Energy Charge – Pass-Thru
For FY 2012, average energy cost was:P-1 Eastside $54/AFP-1 Westside $47/AFP-2 $84/AF
Agencies invoiced for actual energy dollars based on amount of water taken that month.
Assumed 2.5% rate increase in budget.
9May 20, 2013
Admin and O&M Preliminary Budget
104rth year in a row, no increase in budget.May 20, 2013
FY 2012-2013
Adopted Budget
FY 2013-2014
Preliminary Budget Difference
Wages & Employee Benefits 1,185,207$ 1,149,000$ (36,207)$ Repairs & Maintenance 266,500$ 253,500$ (13,000)$ Administration and General 285,950$ 239,540$ (46,410)$ Professional Services 166,000$ 166,000$ -$ Replenishment of Reserves -$ 178,000$ 178,000$ Equipment Replacement 47,000$ -$ (47,000)$ Subtotal 1,950,657$ 1,986,040$ 35,383$ Depreciation 259,100$ 223,717$ (35,383)$ Subtotal 2,209,757$ 2,209,757$ (0)$ Use of Water Resource Fund 27,500$ 27,500$ -$ Other Revenues 113,000$ 113,000$ -$ Grand Total 2,069,257$ 2,069,257$ (0)$
Admin and O&M Preliminary Budget
Kept current conservation program. OPEB remains $65,000. Separate item shows replenishment of
reserves used to pay off CalPERS side fund
Cleaned up equipment replacement category. Include equipment replacement in either CIP or O&M depending on cost.
11May 20, 2013
Admin and O&M Preliminary Budget
3% CPI increase for employees. Merit increases and promotions if
warranted. Pay for Performance if warranted Assume 10 FTE in wages. New
System Operator II included. No increase in Board per diem.
12May 20, 2013
Ten-Year Rolling Averages for Admin and O&M Charge – Current Method
May 20, 201313
CY 2014 Ten-Yr Avg
CY 2014 Percentage
CY 2013 Ten-Yr Avg
CY 2013 Percentage
Acre-feet Difference
Percentage Increase/(Decrease)
CVWD 2,139.9 18.68% 2,233.4 18.45% (93.5) 0.23%
KID 0.0 0.00% 0.0 0.00% - 0.00%
LCID 2,692.5 23.50% 2,747.7 22.69% (55.2) 0.80%
Las Flores 631.8 5.51% 662.4 5.47% (30.7) 0.04%
Lincoln 1,354.1 11.82% 1,553.5 12.83% (199.4) -1.01%
Mesa 697.2 6.08% 709.1 5.86% (11.9) 0.23%
Rubio 889.2 7.76% 1,043.0 8.61% (153.8) -0.85%
Valley 3,053.2 26.65% 3,158.3 26.09% (105.1) 0.56%
Total 11,458.0 100.00% 12,107.5 100.00% (649.5) 0.00%
Shift in percentages due to purchases of Pasadena groundwater by Rubio and Lincoln
Admin and O&M Preliminary Charge for CY 2014 – Current Method
14
Because Lincoln and Rubio are purchasing water from Pasadena, their 10-year rolling averages
are lower along with charges while other agencies’ are increasing.
May 20, 2013
CY 2013 Charge
CY 2014 Preliminary
Charge DifferenceCVWD 380,339$ 385,108$ 4,770$ KID 7,234$ 7,210$ (24)$ LCID 467,915$ 484,565$ 16,650$ Las Flores 112,809$ 113,701$ 892$ Lincoln 264,557$ 243,695$ (20,862)$ Mesa 120,753$ 125,473$ 4,720$ Rubio 177,607$ 160,026$ (17,581)$ Valley 537,836$ 549,479$ 11,643$ Total 2,069,050$ 2,069,257$ 207$
Admin and O&M Preliminary Charge for CY 2014 - Minimum
Most FMWD costs except MWD purchases are fixed whether a retailer takes 1 acre-foot or 1,000 acre-feet
Variable costs have already been separated out – MWD rates and power
Example of Kinneloa paying Administrative costs based on proportion of meters; No operational costs have been assigned since no physical connection
May 20, 201315
Admin and O&M Preliminary Charge for CY 2014 Lincoln and Rubio are currently rolling
off FMWD however FMWD still has Admin and O&M costs and Capital and Rehab costs associated with Lincoln and Rubio
What happens when groundwater leasing stops?
Finance Committee directed development of a minimum payment alternative for all agencies
May 20, 201316
Admin and O&M Preliminary Charge for CY 2014 -Normalized
May 20, 201317
* Does not include transfer between retailers.* Does not include Pasadena transfer to Valley since
Valley serves Pasadena.
Current Method CY 2014 Ten-Yr Rolling Avg
Current Method CY
2014 Percentage
Current Method CY
2014 Preliminary
Charge Normalized Total Sales
Normalized Percentage
Normalized CY 2014
Preliminary Charge
Increase/(Decrease) In Charge to Actual
2013 Charge - Current Method
Increase/(Decrease) In Charge to
Preliminary 2014 Current Method
CVWD 2,140 18.7% 385,172$ 2,179 18.6% 382,995$ 2,656$ (2,177)$ KID 0 0.0% 7,210$ n/a 7,210$ (24)$ -$ LCID 2,693 23.5% 484,646$ 2,703 23.0% 474,973$ 7,057$ (9,673)$ Las Flores 632 5.5% 113,720$ 632 5.4% 111,038$ (1,771)$ (2,682)$ Lincoln 1,354 11.8% 243,736$ 1,560 13.3% 274,107$ 9,549$ 30,371$ Mesa 697 6.1% 125,493$ 697 5.9% 122,534$ 1,781$ (2,960)$ Rubio 889 7.8% 160,053$ 889 7.6% 156,278$ (21,329)$ (3,775)$ Valley 3,053 26.6% 549,570$ 3,073 26.2% 540,123$ 2,288$ (9,447)$ Total 11,458 100.0% 2,069,257$ 11,733 100.0% 2,069,257$ 207$ (343)$
Admin and O&M Preliminary Charge for CY 2014 - Minimum
May 20, 201318
Main Pump Station Flow Entitlement Percentage
CY 2014 Preliminary
Charge
CY 2014 Ten-Yr
Rolling AvgCY 2014
Percentage
CY 2014 Preliminary
Charge
Increase/(Decrease) In Charge to Actual
2013 Charge - Current Method
Increase/(Decrease) In Charge to
Preliminary 2014 Current Method
CVWD 7.8 20% 209,364$ 2,140 18.7% 192,554$ 21,579$ 16,746$ LCID 6.6 17% 176,969$ 2,693 23.5% 242,282$ (48,664)$ (65,394)$ Las Flores 2.4 6% 65,550$ 632 5.5% 56,850$ 9,592$ 8,681$ Lincoln 6.8 18% 183,201$ 1,354 11.8% 121,848$ 40,491$ 61,313$ Mesa 1.6 4% 42,140$ 697 6.1% 62,736$ (15,877)$ (20,618)$ Rubio 5.2 14% 139,456$ 889 7.8% 80,013$ 41,862$ 59,416$ Valley 8.0 21% 214,344$ 3,053 26.6% 274,739$ (48,752)$ (60,486)$ Total 38.5 100% 1,031,023$ 11,458 100.0% 1,038,234$ 207$ (343)$
Method requested by retail agencies for review
Admin and O&M Charge Recommendation By Retail Agencies
Water purchases from other agencies whether groundwater transfers or other type of arrangements to be included as part of sales percentage.
Keep fixed for at least five years. Review annually to ensure
significant variation has not occurred.
May 20, 201319
Preliminary Reserves
20May 20, 2013
BalanceEstimated Balance Target
Min Max 6/30/2012 2/28/2013 6/30/2013
Operating 1,500,000$ 2,000,000$ 2,073,000$ 1,613,000$ 1,416,000$ Water Resource and Conservation -$ -$ 111,000$ 115,000$ 99,000$
Emergency Capital 2,300,000$ 5,750,000$ 2,827,000$ 2,827,000$ 2,827,000$
Rehabilitation & Replacement -$ 1,300,000$ 665,000$ 773,000$ 924,000$ Restricted Future Capital Facilities and Improvement Fund -$ 2,000,000$ 1,160,000$ 1,536,000$ 1,614,000$ OPEB Liability -$ -$ 30,000$ 57,000$ 95,000$ Vehicle and Equipment Replacement 40,000$ 100,000$ 63,000$ 77,000$ 97,759$
Election Expense 28,500$ 85,000$ 64,000$ 73,000$ 84,000$ Total 11,235,000$ 6,993,000$ 7,072,000$ 7,158,000$
Preliminary CIP
To keep the charge the same, must use reserves or finance.
If use PAYG, will impact reserves severely - up to $3.4 million based on current estimates
If obtain financing, charge can be reduced for most agencies and increase is not as high for Lincoln.
21May 20, 2013
Fiscal Year 2012-2013 CIP
Please refer to the handout for details on this year’s CIP.
May 20, 201322
Preliminary Five-Year CIP
Please refer to the handout for the preliminary five-year CIP
Pipeline repair work not included as costs are unknown at this time.
May 20, 201323
Split for CIP Budget – Current Method
May 20, 201324
Common
Pool (AF)
Westside (AF)
Berkshire (AF)
Recycled Water Project
(AF) Common Pool %
Westside %
Berkshire %
Recycled Water
Project % CVWD 2,140 2,140 2,140 18.7% 24.9% 59.1% LCID 2,693 2,693 1,481 3,453 23.5% 31.4% 40.9% 31.4%
Las Flores 632 813 5.5% 7.4% Lincoln 1,354 1,687 11.8% 15.3% Mesa 697 697 6.1% 8.1% Rubio 889 1,323 7.8% 12.0% Valley 3,053 3,053 3,718 26.6% 35.6% 33.8% Total 11,458 8,583 3,621 10,994 100.0% 100.0% 100.0% 100.0%
Split for CIP Budget – Normalized Method
May 20, 201325
Common
Pool (AF)
Westside (AF)
Berkshire
(AF)
Recycled Water Project
(AF) Common Pool %
Westside %
Berkshire %
Recycled
Water Project
% CVWD 2,179 2,179 2,179 18.6% 25.2% 59.5% LCID 2,703 2,703 1,486 3,453 23.0% 31.2% 40.5% 31.4%
Las Flores 632 813 5.4% 7.4% Lincoln 1,560 1,687 13.3% 15.3% Mesa 697 697 5.9% 8.1% Rubio 889 1,323 7.6% 12.0% Valley 3,073 3,073 3,718 26.2% 35.5% 33.8% Total 11,733 8,652 3,666 10,994 100.0% 100.0% 100.0% 100.0%
Preliminary CIP Charges – Request by Agencies
May 20, 201326
PAYG No transfers, No Financing Chart on next slide shows peaks and
valleys for charge Please see worksheet for numbers
Preliminary CIP Charge
May 20, 201327
Preliminary CIP – PAYG – Charges Remain the Same – Reserves Down $3.4 Million
28May 20, 2013
In addition to the transfer, the annual CIP charge must be paid by all agencies.
Current Annual
Payment
Projected CY 2014 Annual
Payment
Projected CY 2015 - CY
2017 Annual Payment
Projected June 2013
Capital and Rehab Fund
Balance Total Transfers
Projected Capital and Rehab Fund
Balance December 2017
CVWD 204,665.04$ 204,665.04$ 204,665.04$ $ 461,522.66 637,442.30$ 428,630.90$ LCID 204,473.04$ 204,473.04$ 204,473.04$ $ 375,173.28 801,291.08$ 190,846.76$ Las Flores 19,937.04$ 19,937.04$ 19,937.04$ $ 44,937.15 188,238.65$ 69,687.84$ Lincoln 26,000.04$ 26,000.04$ 26,000.04$ $ 66,927.82 405,108.32$ 1,298.91$ Mesa 37,475.04$ 37,475.04$ 37,475.04$ $ 90,674.60 207,455.49$ 197,089.52$ Rubio 52,977.00$ 52,977.00$ 52,977.00$ $ 107,930.61 266,303.04$ 231,669.51$ Valley 220,872.00$ 220,872.00$ 220,872.00$ $ 467,130.79 909,161.12$ 800,362.73$ Total 766,118.30$ 766,439.38$ 766,399.20$ $1,614,397.17 3,415,000.00$ 1,919,586.18$
Preliminary CIP - Financing Interest rates currently low Will not be drawing down reserves or
increasing charges Future customers pay for benefits they
receive Smoothing of rates Reduce Capital and Rehab charge Total cost over time is higher because of
interest
29May 20, 2013
Preliminary CIP – Financing Options
iBank SWRCB CSDA Bank Bond financing
30May 20, 2013
Preliminary CIP – Financing Example
31May 20, 2013
Fiscal Year 2013-2014
Fiscal Year 2014-2015
Fiscal Year 2015-2016
Fiscal Year 2016-2017
Fiscal Year 2017-2018 5-Year Total
Common Projects 1,395,353$ 185,000$ 391,000$ 1,068,350$ 175,000$ 3,214,703$ Westside Projects 165,000$ 167,500$ 447,500$ 100,000$ 300,000$ 1,180,000$ Berkshire Projects 691,955$ 25,000$ 100,000$ 276,350$ 375,000$ 1,468,305$ Recycled Water 122,000$ 289,500$ 709,000$ -$ -$ 1,120,500$ Total 2,374,307$ 667,000$ 1,647,500$ 1,444,700$ 850,000$ 6,983,507$
Preliminary CIP – Financing Examples
32May 20, 2013
30 Year Term 25 Year Term 20 Year TermLoan Amount 7,000,000$ 7,000,000$ 7,000,000$ Financing Rate 4.5% 4.5% 4.5%Annual Charge 429,741$ 472,073$ 538,133$ Total Payment 12,892,224$ 11,801,830$ 10,762,660$
Preliminary CIP – 30 Year Term
33May 20, 2013
Normalized Charge Based
on Loan Current Charge
Loan Minus Current Charge
CVWD 108,747$ 204,665$ (95,918)$ LCID 126,542$ 204,473$ (77,931)$ Las Flores 15,751$ 19,937$ (4,186)$ Lincoln 36,877$ 26,000$ 10,877$ Mesa 17,606$ 37,475$ (19,869)$ Rubio 23,290$ 52,977$ (29,687)$ Valley 100,927$ 220,872$ (119,945)$ Total 429,741$ 766,399$ (336,658)$
Preliminary CIP – 25 Year Term
May 20, 201334
Normalized Charge Based
on Loan Current Charge
Loan Minus Current Charge
CVWD 119,459$ 204,665$ (85,206)$ LCID 139,008$ 204,473$ (65,465)$ Las Flores 17,303$ 19,937$ (2,634)$ Lincoln 40,509$ 26,000$ 14,509$ Mesa 19,341$ 37,475$ (18,134)$ Rubio 25,584$ 52,977$ (27,393)$ Valley 110,869$ 220,872$ (110,003)$ Total 472,073$ 766,399$ (294,326)$
Preliminary CIP – 20 Year Term
May 20, 201335
Normalized Charge Based
on Loan Current Charge
Loan Minus Current Charge
CVWD 136,176$ 204,665$ (68,489)$ LCID 158,460$ 204,473$ (46,013)$ Las Flores 19,724$ 19,937$ (213)$ Lincoln 46,178$ 26,000$ 20,178$ Mesa 22,047$ 37,475$ (15,428)$ Rubio 29,164$ 52,977$ (23,813)$ Valley 126,383$ 220,872$ (94,489)$ Total 538,133$ 766,399$ (228,266)$
CIP – Financing Plus Buffer Example
36May 20, 2013
Normalized Charge Based
on Loan Charge with
Buffer Current Charge
Charge with Buffer Minus
Current Charge CVWD 108,747$ 135,934$ 204,665$ (68,731)$ LCID 126,542$ 158,178$ 204,473$ (46,295)$ Las Flores 15,751$ 19,689$ 19,937$ (248)$ Lincoln 36,877$ 46,096$ 26,000$ 20,096$ Mesa 17,606$ 22,008$ 37,475$ (15,467)$ Rubio 23,290$ 29,112$ 52,977$ (23,865)$ Valley 100,927$ 126,159$ 220,872$ (94,713)$ Total 429,741$ 515,689$ 766,118$ (250,429)$
Assume 30 Year Term
Financing at $10 Million Example
May 20, 201337
Normalized Charge Based
on Loan Current Charge
Charge Minus Current Charge
CVWD 155,353$ 204,665$ (49,312)$ LCID 180,775$ 204,473$ (23,698)$ Las Flores 22,502$ 19,937$ 2,565$ Lincoln 52,681$ 26,000$ 26,681$ Mesa 25,152$ 37,475$ (12,323)$ Rubio 33,271$ 52,977$ (19,706)$ Valley 144,181$ 220,872$ (76,691)$ Total 613,915$ 766,118$ (152,484)$
Preliminary CIP Review alternatives with member
agencies and Finance Committee June Recommendation to Board
38May 20, 2013
Kinneloa CIP
Based on late invoices and truing up expenditures, although Kinneloa is not involved in the recycled water project, there is an amount due of $40. Recommendation to release KID from this obligation.
May 20, 201339
Preliminary Budget Summary based on 7,975 AF of Sales
40
Please refer to handout
May 20, 2013
Next Steps
Review Capital Charge alternatives with member agencies
Review alternatives with Finance Committee
June Board with Recommendation
41May 20, 2013
Comments/Questions
42May 20, 2013