Final Budget FY 15-16 O&M and rate setting Capital Budget Debt Service Budget 1.

1

Final Budget FY 15-16

O&M and rate setting

Capital Budget

Debt Service Budget

2

Water Budget 15-16Major Assumptions

• 67 employees, down 1 from last year• Drought Coordinator position will be filled immediately• Water tiered rates will be changed January 1, 2016• Other water rates & charges will be changed July 1, 2015

3

Water Operating Budget 15-16

• Mandatory water cutbacks beginning July 1, 2015– Cutbacks will be based on FY 13-14 sales– M&I Customers will be cut back by 15%– SAWR customers will be cut back by 15%

• Shortage Level 2 has been declared

4

Water Budget 15-16

• CWA’s CY 2016 will not be approved until June– 6% overall increase to wholesale cost of water based

on draft rates– New Fixed Charge-Supply Reliability Charge– SAWR has been extended to 12/31/20

5

Water Budget 15-16Major Assumptions (con’t)

• How much will we sell? – FY 13-14 sales of 12,570 AF cut to 10,700 for

FY 15-16– M&I 6,900 AF – SAWR 3,800 AF – Total 11,400 AF Purchased (6.3% loss factor)– 62.2% sold July through Dec– 38.8% sold Jan through June

6

Philosophies &Assumptions• Water Dept.

– 80% of M&I fixed costs collected through Service Charges, 20% through water mark up.

– 100% of Ag fixed costs are collected through Service Charges. No markup on water.

– Pass through all increases in MWD/CWA cost of water

7

FY 15-16Domestic & LD Water Rate Philosophy

• Tier 1 water (1-5units) is priced at 90% Base – (8% of D & LD sales)

• Tier 2 water (16-30 units) is priced at Base– (73% of D & LD sales)

• Tier 3 water sales is priced at 1.1*Base– (19% of D & LD sales)

• Shortage Level 2 revenues used to pay penalties levied on the District & conservation programs

8

FY 15-16Water Rate Philosophy

Remainder of CY 2015: • SAWR water is sold for exactly the price FPUD

pays for it, $3.18 • Commercial Ag water is sold for exactly the price

FPUD pays for it, $4.28• The only markup on water is on M&I tiers 2&3

9

Operating Rate Changes effective July 1, 2015

• 3% Increase to Ag Ops charge ($1.35 for ¾” meter)• 3% Increase to M&I Ops charge ($1.14 for ¾” meter)• Increase pumping charge by $.02 to $.33/kgal which

is an SDG&E pass through. • No change to charge of $.10/kgal for capital

replacement of Harris, Donnil, Toyon & Daily pump stations.

• These rates are a pass through of RTS, IAC and wholesale water rate increases

10

FY 15-16Water Rate Philosophy

Beginning CY 2016: • SAWR water is sold for exactly the price FPUD

pays for it, estimated to be $3.28, up from $3.18 • Commercial Ag water is sold for exactly the price

FPUD pays for it, estimated to be $4.76, up from $4.28

• The only markup on water is on M&I tiers 2&3

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FY 15-16Water Rate Philosophy

Beginning CY 2016• Tier 1 M&I water is sold at a loss

– Tier 1 rate is proposed to be $4.66, an increase of $.28 • 10% price differential between Tiers 1 & 2

– Tier 2 is proposed to be $5.13, an increase of $.31• 10% price differential between Tiers 2 & 3

– Tier 3 is proposed to be $5.65, an increase of $.34• Prices updated and mailed to customers prior to 1/1/16

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Sample 2016 Water Bill

CY 16 Customer ImpactDomestic 3/4" meter using 15 units/month (5 units winter use)

Current ProposedService Chg 38.10 39.24 1st 5 kgal (Tier 1) 21.90 23.30 Tier 2 usage 48.20 51.30 Tier 3 - - RTS 4.26 4.00 IAC 2.70 2.77 Capital Improvement 8.59 9.06

123.75 129.67

Total Water Bill Impact $ 5.92 % Impact 4.8%

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WATER DEPARTMENT

2014-15 2014-15 2015-16 Budget Est. Actual BudgetRevenues Water Sales 15,298,803 15,542,067 14,989,470 Service Charges 4,899,860 4,931,383 4,981,619 MWD RTS Charge 478,718 536,287 449,649 SDCWA IAC Charge 380,706 381,275 387,090 Sundry 200,000 254,123 300,000

      Total Revenues 21,258,087 21,645,135 21,107,828

Expenses Production 15,594,824 15,957,708 15,826,064 Customer Service 1,469,063 1,449,532 1,392,385 Distribution 1,623,937 1,409,696 1,693,738 Allocated Admin Expenses 2,299,986 2,181,649 2,398,956

Debt Service Transfer - - -      

Total Expenses 20,987,810 20,998,587 21,311,144

Net Revenue/(Expense) 270,277 646,548 (203,316)

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Water Dept. 2014-15 2014-15 2015-16

Budget Est. Actual Budget

Net Revenue/(Expense) 270,277 646,548 (203,316)

Transfer to Recycled - -

Beginning Fund Balance 5,656,709 4,025,825 4,672,373

Ending Fund Balance 5,926,986 4,672,373 4,469,058

EQUITY REQUIREMENTS

Water Reserve 1,384,320 1,384,320 1,487,748

Repair 750,000 750,000 750,000

Working Capital 1,637,879 1,637,879 1,538,135

Rate Stabilization 370,951 370,951 166,315

Total Equity Required 4,143,150 4,143,150 3,942,198

Unappropriated Funds 1,783,836 529,223 526,860

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Philosophies &Assumptions• Wastewater Dept.

– New methodology began FY 09-10– Single Family Residences

• Rate based on lowest water usage in month during 5 months of winter, November ‘14 through March ‘15

• Assumed 90% of this water is returned to the sewer• Median usage is 5, same as last year. Median has been 5

for 5 of the seven years• Cap remains at 18 units (100% of use over 18 for

irrigation)

• 10% lower flows into plant with water cutbacks

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Single Family - FY 14-15 (current year)      

Single Family - FY 15-16 (current year)    

Consumption (1,000

gal) RTSSewer Flow

Fixed Charge

Commodity Rate

Consumption

Charge Total BillFixed

ChargeCommodity

RateConsumption

Chg Total Bill%

Increase

0 90% 0.0 $ 14.10 $ 7.64 $ - $ 14.10 $ 14.23 $ 8.21 $ - $ 14.23 0.9%

1 90% 0.9 $ 14.10 $ 7.64 $ 6.88 $ 20.98 $ 14.23 $ 8.21 $ 7.39 $ 21.62 3.1%

2 90% 1.8 $ 14.10 $ 7.64 $ 13.75 $ 27.85 $ 14.23 $ 8.21 $ 14.78 $ 29.01 4.1%

3 90% 2.7 $ 14.10 $ 7.64 $ 20.63 $ 34.73 $ 14.23 $ 8.21 $ 22.17 $ 36.40 4.8%

4 90% 3.6 $ 14.10 $ 7.64 $ 27.51 $ 41.61 $ 14.23 $ 8.21 $ 29.57 $ 43.79 5.2%

5 90% 4.5 $ 14.10 $ 7.64 $ 34.39 $ 48.49 $ 14.23 $ 8.21 $ 36.96 $ 51.18 5.6%

6 90% 5.4 $ 14.10 $ 7.64 $ 41.26 $ 55.36 $ 14.23 $ 8.21 $ 44.35 $ 58.57 5.8%

7 90% 6.3 $ 14.10 $ 7.64 $ 48.14 $ 62.24 $ 14.23 $ 8.21 $ 51.74 $ 65.97 6.0%

8 90% 7.2 $ 14.10 $ 7.64 $ 55.02 $ 69.12 $ 14.23 $ 8.21 $ 59.13 $ 73.36 6.1%

9 90% 8.1 $ 14.10 $ 7.64 $ 61.90 $ 75.99 $ 14.23 $ 8.21 $ 66.52 $ 80.75 6.3%

10 90% 9.0 $ 14.10 $ 7.64 $ 68.77 $ 82.87 $ 14.23 $ 8.21 $ 73.91 $ 88.14 6.4%

11 90% 9.9 $ 14.10 $ 7.64 $ 75.65 $ 89.75 $ 14.23 $ 8.21 $ 81.31 $ 95.53 6.4%

12 90% 10.8 $ 14.10 $ 7.64 $ 82.53 $ 96.63 $ 14.23 $ 8.21 $ 88.70 $ 102.92 6.5%

13 90% 11.7 $ 14.10 $ 7.64 $ 89.41 $ 103.50 $ 14.23 $ 8.21 $ 96.09 $ 110.31 6.6%

14 90% 12.6 $ 14.10 $ 7.64 $ 96.28 $ 110.38 $ 14.23 $ 8.21 $ 103.48 $ 117.71 6.6%

15 90% 13.5 $ 14.10 $ 7.64 $ 103.16 $ 117.26 $ 14.23 $ 8.21 $ 110.87 $ 125.10 6.7%

16 90% 14.4 $ 14.10 $ 7.64 $ 110.04 $ 124.14 $ 14.23 $ 8.21 $ 118.26 $ 132.49 6.7%

17 90% 15.3 $ 14.10 $ 7.64 $ 116.91 $ 131.01 $ 14.23 $ 8.21 $ 125.65 $ 139.88 6.8%

18 90% 16.2 $ 14.10 $ 7.64 $ 123.79 $ 137.89 $ 14.23 $ 8.21 $ 133.05 $ 147.27 6.8%

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Philosophies &Assumptions• Commercial Users

– Based on actual monthly water usage– Strength classifications based on SIC code

• Strength appeals available

– RTS (Return to Sewer) percentages may vary depending on outdoor irrigation & business type, such as a water store • RTS appeals available

– RTS categories are set at 10% intervals

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Philosophies &Assumptions

• Multi family & other users such as schools, churches & government– Based on actual monthly water usage– RTS (Return to Sewer) percentages will vary

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Sample 2016 Water & Sewer BillCY 16 Customer ImpactDomestic 3/4" meter using 15 units/month (5 units winter use)

Current ProposedService Chg 38.10 39.24 1st 5 kgal (Tier 1) 21.90 23.30 Tier 2 usage 48.20 51.30 Tier 3 - - RTS 4.26 4.00 IAC 2.70 2.77 Capital Improvement 8.59 9.06

123.75 129.67

Total Water Bill Impact $ 5.92 % Impact 4.8%

Current ProposedSewer Svc 48.49 51.18Capital Improvement Chg 10.44 10.70Tax Takeaway 0.00 0.00Total Sewer 58.93 61.88

Sewer Bill Impact $ 2.95

Combined Impact $8.87Impact as a percentage 4.9%

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Wastewater Dept. Budget Summary

2014-15 2014-15 2015-16 Budget Est. Actual BudgetRevenues Service Charges 5,349,792 5,581,200 5,634,832 Class A Biosolids Sales 100 100 100 Sundry 1,000 4,081 1,000

    Total Revenues 5,350,892 5,585,381 5,635,932

Expenses

Collection 1,010,747 936,394 1,032,724 Treatment 864,441 973,384 918,707 Disposal/Regulatory Compliance 895,780 875,069 944,576 Allocated Admin Expenses 1,857,681 1,728,854 1,937,618 Debt Service Transfer 671,054 671,054 682,528

      Total Expenses 5,299,703 5,184,756 5,516,153

Net Revenue/(Expense) 51,189 400,626 119,779

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Wastewater Fund Balance Summary 2014-15 2014-15 2015-16

Budget Est. Actual Budget

Net Revenue/(Expense) 51,189 400,626 119,779

Beginning Fund Balance 1,534,053 519,600 920,226

Ending Fund Balance 1,585,242 920,226 1,040,005

EQUITY REQUIREMENTS

Working Capital 1,157,162 1,157,162 1,208,406

Catastrophic Repair 250,000 250,000 250,000

Total Equity Required 1,407,162 1,407,162 1,458,406

Unappropriated Funds 178,080 (486,936) (418,401)

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Summary of Changes

• Wastewater new methodology–Increase monthly fixed charge $.13 to

$14.23/month fixed charge for ¾” meter–Increase low strength $.57 to $8.21/kgal–Increase medium strength $.81 to $12.35–Increase high strength $1.28 to $20.63

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Philosophies &Assumptions• Recycled Dept.

– Rates set at greater of 85% Tier 1 rate or 80% of the average T1 and T2 M&I rates.

– Continue to find new recycled customers, new capital pipeline project budgeted for FY 15-16

– Monitor Regional Board’s permitting requirements and fees.

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Recycled Budget Summary 2014-15 2014-15 2015-16 Budget Est. Actual BudgetRevenues Water Sales 712,673 679,097 808,786 Service Charges 51,791 54,162 54,867 MWD/CWA Incentive 224,000 172,900 135,000 Sundry * 5,000 5,000 5,000

      Total Revenues 993,464 911,159 1,003,653

Expenses Production 592,170 475,351 542,753 Distribution 72,953 43,054 73,198 Allocated Admin Expenses 265,383 205,816 276,803 Debt Service Transfer 92,400 92,400 94,248

      Total Expenses 1,022,906 816,621 987,002

Net Revenue/(Expense) (29,442) 94,538 16,651

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FY 15-16Recycled Dept.

• Projected Operating Revenue $16k – MWD Rebate ended 1/31/15

• Any shortfall made up by Water Dept.• Increase rate by $.22 from $3.74 to $3.96

effective 1/1/16• Project to sell 675 AF for FY 15-16

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Philosophies &Assumptions• Administrative Dept. & Engineering Dept.

– Are not revenue generating departments.– Admin & Eng costs must be allocated between

• Water (52%)• Wastewater (42%)• Recycled (6%)

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Admin Dept. Budget Summary

2014-15 2014-15 2015-16 Budget Est. Actual BudgetExpense Allocation Water Department 2,299,986 2,181,649 2,398,956 Wastewater Department 1,857,681 1,728,854 1,937,618 Recycled Water Department 265,383 205,816 276,803

      Total Allocation 4,423,050 4,116,320 4,613,377

Expenses Administration & Financial Mgmt 2,570,320 2,512,316 2,691,278 Engineering 854,734 746,352 893,117 Community Relations 249,394 172,075 281,069 Personnel Support 748,602 685,577 747,912

      Total Expenses 4,423,050 4,116,320 4,613,377

Net Revenue/(Expense) - - -

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Warehouse & Equipment• Includes:

– Warehouse Ops-purchases & issues of inventory– Vehicle Maintenance-fuel– Part of the costs are seen in every program under

“Equipment Allocation”– Other costs are recovered through inventory markup

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FY 15-16 Capital Budget

• Water • Wastewater• Recycled• Admin

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Water Capital Funding • $6.2M capital budget for water projects for FY 15-16 for

pipelines, pump stations & Santa Margarita Conjunctive Use project

• Funding:– Increase Capital Improvement Charge to $9.06/EMU from

$8.59 with ENR of 2.5%+3% inflator to 2033 to bring replacement cycle to 84 years

– We will receive $900k in Prop 50 funds for Conjunctive Use Project

– No Increase to pumping charge $0.10/kgal to fund Harris/Donnil/Toyon & Daily capital improvements

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Wastewater & Recycled Capital Funding

• $5.6M budgeted for FY 15-16 to complete two year construction of WWTP rehab project.

• Total expected project cost $28.4M• $1.7M Recyc Water Eastline extension

– $800k funded by Prop 84 funding

• Increase Wastewater Capital Improvement Charge of $10.44/EDU to $10.70 to raise $1.075M towards $1.7M annual debt service payment and collections systems improvements.

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FY 15-16 Debt Service• $7.2M QECB Solar loan at WWTP ($4.96M balance)

– Sources of funding:• CSI Rebate of $.32/kWh generates $752,819/yr. for 5 years,

this is year 5.• SDG&E offset of $393,928/yr.• Sequestration has cost 8.7% of Federal Interest subsidy,

$13.4k in FY 15-16

• $28.3M SRF loan for WWTP rehab – How to pay $1.7M debt service?

• Payments begin 12/2017• 1% property taxes of $800,000• Transfers from WW/Recyc Ops $382,000/year• Wastewater Capital Improvement Charge from $10.44 to

$10.70/EDU to raise the remainder

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FY 15-16 Debt Service

• $6.2M Red Mtn. SRF ($5M balance)– Annual payments of $395,893 come from 1%

property tax revenues.

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Final Budget FY 15-16

O&M and rate setting

Capital Budget

Debt Service Budget