SPRINGFIELD UTILITY BOARD General Manager's Office MEMORANDUM DATE: August 7, 2014 TO: Budget Committee Members FROM: Jeff Nelson SUBJECT: Electric and Water Utilities’ Ten-Year Cash Flow Information Attached are copies of the proposed Electric and Water utilities’ ten-year cash flow models and the ten-year major capital improvement projects for each utility. At the mid-year Budget Committee meeting, we will review for each utility: 1. Highlighted mid-year financials for Water and Electric; 2. Categories of capital projects; 3. Rate increase projections for 2015 through 2024; and 4. Projected working capital reserves. As mentioned before, each year we review and update the cash flow models at least twice each year. The Budget Committee requested additional information and provided recommendations. Those were: • A recommendation to increase the minimum Electric Utility Reserves from $6,000,000. The Board adopted $13,000,000 in the 2014 Budget. • A recommendation to increase the minimum Water Utility Reserves from $400,000. The Board adopted $2,500,000 in the 2014 Budget. • A request for additional information on customer bills (discussed further in this memo) • A recommendation to continue evaluating opportunities for the Water Utility to borrow funds from the Electric Utility for water capital projects.
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SPRINGFIELD UTILITY BOARD General Manager's Office
MEMORANDUM
DATE: August 7, 2014
TO: Budget Committee Members
FROM: Jeff Nelson
SUBJECT: Electric and Water Utilities’ Ten-Year Cash Flow Information
Attached are copies of the proposed Electric and Water utilities’ ten-year cash flow models and
the ten-year major capital improvement projects for each utility.
At the mid-year Budget Committee meeting, we will review for each utility:
1. Highlighted mid-year financials for Water and Electric;
2. Categories of capital projects;
3. Rate increase projections for 2015 through 2024; and
4. Projected working capital reserves.
As mentioned before, each year we review and update the cash flow models at least twice each
year.
The Budget Committee requested additional information and provided recommendations.
Those were:
• A recommendation to increase the minimum Electric Utility Reserves from $6,000,000.
The Board adopted $13,000,000 in the 2014 Budget.
• A recommendation to increase the minimum Water Utility Reserves from $400,000.
The Board adopted $2,500,000 in the 2014 Budget.
• A request for additional information on customer bills (discussed further in this memo)
• A recommendation to continue evaluating opportunities for the Water Utility to borrow
funds from the Electric Utility for water capital projects.
Memorandum to the Budget Committee
August 7, 2014
Page 2
Review
The Budget Committee met for a mid-year review on August 14, 2013 and again for the 2014
Budget process on November 25, 2013. The Board adopted the 2014 Budget at the December
Beginning Working Capital 3,267,580$ 2,182,371$ 569,077$ 90,652$ 527,176$ 1,785,006$ Restricted Funds Moving To Unrestricted FundsUnrestricted Funds Moving To Restricted FundsEnding Working Capital 2,182,371$ 569,077$ 90,652$ 527,176$ 1,785,006$ 2,668,898$ Working Capital Reserve (2,500,000)$ (2,500,000)$ (2,500,000)$ (2,500,000)$ (2,500,000)$ (2,500,000)$ Net Available Working Capital (317,629)$ (1,930,923)$ (2,409,348)$ (1,972,824)$ (714,994)$ 168,898$
Water Utility Cash Flow (8/13/2014 Budget Meeting)
2020 2021 2022 2023 2024Total General Sales (No Growth after 2013 and No Rate Increase) 9,298,426$ 9,298,426$ 9,298,426$ 9,298,426$ 9,298,426$ Usage Growth 0.0% 0.0% 0.0% 0.0% 0.0%Cummulative Usage Growth 0.0% 0.0% 0.0% 0.0% 0.0%Total General Sales (No Rate Increase) 9,298,426$ 9,298,426$ 9,298,426$ 9,298,426$ 9,298,426$ Rate Increase 4.00% 0.00% 0.00% 0.00% 0.00%Cummulative Rate Increase 48.83% 48.83% 48.83% 48.83% 48.83%General Sales with Rate Increase 13,839,221$ 13,839,221$ 13,839,221$ 13,839,221$ 13,839,221$
BUDGETED RESOURCESTotal General Sales 13,839,221$ 13,839,221$ 13,839,221$ 13,839,221$ 13,839,221$ Total Contract Sales 183,257$ 183,257$ 183,257$ 183,257$ 183,257$ New Treatment Plant Loans 17,000,000$ -$ -$ -$ -$ TOTAL OTHER INCOME (Includes Loans) 829,384$ 1,361,869$ 1,093,140$ 991,893$ 1,074,525$
TOTAL RESOURCES 31,851,862$ 15,384,347$ 15,115,618$ 15,014,371$ 15,097,003$
BUDGETED EXPENSESBUDGETED EXPENSESTotal Labor 5,677,982$ 5,848,322$ 6,023,771$ 6,204,484$ 6,390,619$ Total Operating Costs 1,028,599$ 1,049,171$ 1,070,155$ 1,091,558$ 1,113,389$ Total Capital 5,859,370$ 12,187,961$ 13,240,165$ 3,780,500$ 2,525,578$
Debt Service Cost 404,849$ 404,849$ 404,849$ -$ -$ Purchased Water Rainbow 415,000$ 415,000$ 415,000$ 415,000$ 415,000$ New Water Source Debt Service -$ 1,693,635$ 1,693,635$ 1,693,635$ 1,693,635$
TOTAL OTHER COSTS 819,849$ 2,513,484$ 2,513,484$ 2,108,635$ 2,108,635$
TOTAL EXPENSES 13,385,801$ 21,598,938$ 22,847,575$ 13,185,177$ 12,138,221$
Beginning Working Capital 2,668,898$ 21,134,959$ 14,920,368$ 7,188,411$ 9,017,605$ Restricted Funds Moving To Unrestricted FundsUnrestricted Funds Moving To Restricted Funds -$ Ending Working Capital 21,134,959$ 14,920,368$ 7,188,411$ 9,017,605$ 11,976,387$ Working Capital Reserve (2,500,000)$ (2,500,000)$ (2,500,000)$ (2,500,000)$ (2,500,000)$ Net Available Working Capital 18,634,959$ 12,420,368$ 4,688,411$ 6,517,605$ 9,476,387$
Substations• Add Secondary Oil Containment for Existing Substation
Transformers
• Replacement of Aging Equipment
• Equipment Upgrades and Additions
Transmission
Major Capital Projects – Electric Utility
Transmission• Upgrade the Springfield - Alvey Transmission Line
Overhead Distribution• Deteriorated Pole Replacement Program
• Upgrade Distribution Facilities for Increased Transfer Capability
• On Hold - Voltage Conversion Projects, except for Glenwood
• Enhanced – Glenwood Infrastructure
Major Capital Projects – Electric Utility
• Enhanced – Glenwood Infrastructure
Underground Distribution• Ongoing monitoring and replacement of underground
Beginning Working Capital 29,741,302$ 27,987,481$ 26,385,389$ 25,505,978$ 25,135,716$ 24,990,300$ Refinancing Water Debt From Electric Reserves -$ Ending Working Capital 27,987,481$ 26,385,389$ 25,505,978$ 25,135,716$ 24,990,300$ 25,124,085$ Working Capital Reserve (13,000,000)$ (13,000,000)$ (13,000,000)$ (13,000,000)$ (13,000,000)$ (13,000,000)$ Net Available Working Capital 14,987,481$ 13,385,389$ 12,505,978$ 12,135,716$ 11,990,300$ 12,124,085$
Electric Utility Cash Flow (8/13/14 Budget Meeting)
BUDGETED RESOURCESTotal General Sales 57,444,779$ 58,766,239$ 60,019,365$ 61,142,114$ 61,751,409$ Total Contract Sales -$ -$ -$ -$ -$ Utility InterCompany Loan 404,849$ 404,849$ 404,849$ 404,849$ -$ TOTAL OTHER INCOME (Includes Intercompany Loan) 3,444,529$ 3,419,539$ 3,404,620$ 3,417,773$ 3,015,112$
TOTAL RESOURCES 60,889,307$ 62,185,778$ 63,423,985$ 64,559,887$ 64,766,521$
BUDGETED EXPENSESTotal Labor 12,764,181$ 13,147,106$ 13,541,520$ 13,947,765$ 14,366,198$ Total Operating Costs 2,925,889$ 2,984,406$ 3,044,094$ 3,104,976$ 3,167,076$ Total Capital 3,453,800$ 4,873,197$ 3,293,837$ 3,540,125$ 3,581,395$
SUB Conservation Payment 1,000,000$ 1,000,000$ 1,000,000$ 1,000,000$ 1,000,000$ In Lieu of Taxes 2,014,040$ 2,034,180$ 2,054,522$ 2,075,067$ 2,095,818$ Debt Service Cost -$ -$ -$ -$ -$ Purchased Power 38,967,746$ 39,601,466$ 40,045,003$ 40,446,953$ 40,852,922$ TOTAL OTHER COSTS 41,981,786$ 42,635,647$ 43,099,525$ 43,522,020$ 43,948,741$
TOTAL EXPENSES 61,125,655$ 63,640,356$ 62,978,977$ 64,114,887$ 65,063,409$
Beginning Working Capital 25,124,085$ 24,887,738$ 23,433,160$ 23,878,169$ 24,323,169$ Refinancing Water Debt From Electric ReservesEnding Working Capital 24,887,738$ 23,433,160$ 23,878,169$ 24,323,169$ 24,026,281$ Working Capital Reserve (13,000,000)$ (13,000,000)$ (13,000,000)$ (13,000,000)$ (13,000,000)$ Net Available Working Capital 11,887,738$ 10,433,160$ 10,878,169$ 11,323,169$ 11,026,281$
Project Labor Capital
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Distribution: 2000 Of Main Replacement-Replacement
of failing galvanized and OD steel pipe. $ 65,000 $ 145,000
and fence work for the new substation. This project is part of a multi-year process to build a
new substation in the area of 42nd St.
$37,000 $655,800
8 Reliability through Proactive Maintenance: Replace Power Transformer at Laura
Replace Bank #2 at Laura substation. This will replace aging equipment as it nears end of life.
$12,900 $780,000
9 Reliability through Proactive Maintenance: Replace CHINOOK PBC
Replace CHINOOK feeder breaker at Laura substation. This will replace aging equipment as it
nears end of life.
$4,300 $18,100
10 Upgrade to Current Standards: Replace Relay Panel Begin replacing first generation of SEL
relays at Gateway. This project will replace aging relays and communication equipment with
modern devices.
$15,900 $11,000
11 Reliability through Increased Capacity: Move Transformer to Olympic Move Laura Bank #2 to
Olympic as a live back-up transformer.
$6,500 $53,700
12 Reliability through Increased Capacity: Olympic to E. Springfield 115kV - Section 3
This project is section 3of4 and is a placeholder for bringing transmission to new substation and
is part of a multi-year process to build a new substation in the area east of 42nd St.
$95,800 $164,300
13 Reliability through Increased Capacity: Reconductor Springfield/Olympic 115kV
Replace existing 397 ACSR with 795 AAC from Springfield along the truck road. This project
would bring increase in the capacity of the Springfield / Olympic transmission line.
$19,400 $30,300
TOTALS $382,400 $2,368,400
TRANSMISSION:
SUBSTATION:
DISTRIBUTION:
Electric Division
Capital Improvements
Budget 2022
Projects Labor Capital
1 Reliability through Proactive Maintenance: Pole Replacement
Replace 30 poles that have been identified with structural weakness. This project replaces poles
that are typically found during our test and treat cycle. The poles are replaced before failure.
$69,700 $42,000
2 Reliability through Proactive Maintenance: Underground Cable Replacement
Replace 10,000' of primary underground cables in the distribution system. This project limits
exposure to future cable failures.
$53,800 $183,900
3 Reliability through Diversity: Double Circuit with LOCUST to Glenwood
Construct a second river crossing from Glenwood to West 'D' St. It will increase the ability to shift
load within the system.
$32,300 $15,100
4 Reliability through Increased Capacity: New 12.47 Area - Distribution
Backbone construction to tie new substation to existing feeder network. This project is part of a
multi-year process to build a new substation in the area east of 42nd St.
$133,500 $64,000
5 Reliability through Operational Efficiency: Reconductor Small Wire Reconductor 2,000' of small
wire, heavily loaded taps and refuse for coordination. This project replaces the conductor for
better capacity and workability and checks sectionalizing coordination.
$21,500 $7,100
6 Reliability through Proactive Maintenance: Replace Get-Aways
Replace SOCKEYE get-away cables at Laura. This project will replace aging equipment before it
fails.
$5,200 $4,000
7 Hazard Mitigation: Install Oil Containment
Install oil containment for all Banks at Jasper substation. This project is part of the hazard
mitigation plans to minimize impact of a large oil spill.
$6,500 $300,000
8 Upgrade to Current Standards: Replace Relay Panel at Gateway Complete the replacement of
aging relays and communication equipment with modern devices.
$15,900 $11,000
9 Reliability through Proactive Maintenance: Replace Regulators
Replace the three phase regulator with three single phase regulators for SAPPHIRE at Mt. Vernon
substation. Replace aging equipment as it nears end of life and achieve better voltage control with
single phase regulation.
$15,100 $75,000
10 Reliability through Increased Capacity: Install Transformer Protection
Install transformer protection equipment for Bank #2 at Olympic substation. This project will add a
circuit switcher for new bank position at Olympic.
$17,700 $76,000
11 Reliability through Increased Capacity: Install New Open Distribution Bus at Olympic
Install 3-bay steel structure for bus tie, distribution breaker and transformer. Bus tie will go to
existing metal clad and the MOOSE will be on new structure.
$15,500 $82,200
12 Reliability through Increased Capacity: Olympic to E. Springfield 115kV - Section 4
This project is section 4 of 4 and is a placeholder for bringing transmission to new substation. This
project is part of a multi-year process to build a new substation in the area east of 42nd St.
$46,100 $79,100
TOTALS $432,800 $939,400
SUBSTATION:
TRANSMISSION:
DISTRIBUTION:
Electric Division
Capital Improvements
Budget 2023
Projects Labor Capital
1 Reliability through Proactive Maintenance: Pole Replacement
Replace 30 poles that have been identified with structural weakness. This project replaces poles
that are typically found during our test and treat cycle. The poles are replaced before failure.
$69,700 $42,000
2 Reliability through Proactive Maintenance: Underground Cable Replacement
Replace 10,000' of primary underground cables in the distribution system. This project limits
exposure to future cable failures.
$53,800 $183,900
3 Reliability through Operational Efficiency: Reconductor Small Wire Reconductor 2,000' of
small wire, heavily loaded taps and refuse for coordination. This project replaces the conductor
for better capacity and workability and checks sectionalizing coordination.
$21,500 $7,100
4 Reliability through Proactive Maintenance: Replace Get-Aways
Replace QUARTZ get-away cables at Jasper substation. This project will replace aging equipment
before it fails.
$8,600 $9,100
5 Hazard Mitigation: Install Oil Containment
Install oil containment for all Banks at Mt. Vernon substation. This project minimizes the impact
of a large oil spill.
$4,300 $194,300
6 Reliability through Increased Capacity: New 12.47 Area Substation - Equipment
Buy and start installation of substation equipment. This project is part of a multi-year process to
build a new substation in the area east of 42nd St. for increased reliability, capacity and SUB
control.
$35,300 $361,000
7 Reliability through Proactive Maintenance: Replace Transmission Breaker
Replace a transmission breaker that is 30 years old. This project will replace aging equipment
before it fails.
$12,900 $62,600
8 Reliability through Increased Capacity: New 12.47 Area Substation - 2nd 115kV
Placeholder to construct second transmission circuit to new substation. This project assures a
second transmission feed into the new substation, meeting our planning criteria.
$135,600 $232,500
TOTALS $341,700 $1,092,500
SUBSTATION:
TRANSMISSION:
DISTRIBUTION:
Electric Division
Capital Improvements
Budget 2024
Projects Labor Capital
1 Reliability through Proactive Maintenance: Pole Replacement
Replace 30 poles that have been identified with structural weakness. This project replaces
poles that are typically found during our test and treat cycle. The poles are replaced before
failure.
$69,700 $42,000
2 Reliability through Proactive Maintenance: Underground Cable Replacement
Replace 10,000' of primary underground cables in the distribution system. This project limits
exposure to future cable failures.
$53,800 $183,900
3 Reliability through Operational Efficiency: Reconductor Small Wire Reconductor 2,000' of
small wire, heavily loaded taps and refuse for coordination. This project replaces the
conductor for better capacity and workability and checks sectionalizing coordination.
$21,500 $7,100
4 Reliability through Increased Capacity: New 12.47 Area Substation - Equipment
Continue installation of substation equipment. Buy and install the power transformer. This
project is part of a multi-year process to build a new substation in the area east of 42nd St
for increased reliability, capacity and SUB control.
$35,300 $801,000
5 Reliability through Proactive Maintenance: Replace Two (2) - 30 Year Old PCB
Replace two (2) distribution feeder breakers that are 30 years old. This project will replace
aging equipment as it nears end of life.
$8,600 $36,200
TOTALS $188,900 $1,070,200
SUBSTATION:
DISTRIBUTION:
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M E M O R A N D U M
EUGENE WATER & ELECTRIC BOARD
TO: Commissioners Brown, Mital, Helgeson, Manning and Simpson
FROM: Cathy Bloom, Finance Manager; Sue Fahey, Fiscal Services Supervisor; Harvey Hall, Deborah Hart & Edward Yan, Senior Financial Analysts DATE: July 15, 2014
SUBJECT: Long-Term Financial Plan Update and 2015 Budget Assumptions
OBJECTIVE: Direction on 2015 Budget Assumptions Issue Board Policy SD6 requires that staff prepare balanced budgets for the Electric and Water Utilities on an annual basis and that the Board approves those budgets by the end of the calendar year. Each summer the Board provides direction to staff on the assumptions used to develop the following year’s budget. Background In recent years both the Electric and Water Utilities have experienced financial challenges, albeit very different ones. Water consumption did not rebound as quickly as anticipated after the recession resulting in lower than projected revenues to support the high fixed cost nature of the business. Water Utility reserve levels and working cash were extremely low which was compounded by aging infrastructure replacement needs. While Electric loads remained comparatively stable, wholesale power prices plummeted. Power sales revenue budgets which had been used to support operations declined over $40 million in the last five years as a result of that wholesale price reduction and less resources available from the Bonneville Power Administration. Accordingly, the Electric Utility struggled to balance budgets and meet Board targets for debt service coverage. In June 2013, faced with the potential of over $20 million in 2014 operations and maintenance (O&M) budget reductions to meet Board financial targets, the Board approved financial policies that align with an “A” bond rating for the Electric Utility versus the prior ones that aligned with a “AA” bond rating. Shortly after that, the Electric Utility’s bond rating was reduced to “A” by rating agencies. In developing the 2013 and 2014 budgets, EWEB reduced over 70 positions and $7.7 million O&M dollars to increase the financial stability of both Utilities. In addition, capital budgets were reduced or deferred by $60 million and $20 million in 2013 and 2014, respectively. These reductions were made using a priority-based budgeting approach aligned with EWEB’s overarching strategy “To Deliver Value for Generations.” Discussion Over the last several months, management and staff have considered the Board’s feedback from strategic planning meetings to develop the long term financial plans (LTFP) and budget assumptions. The Strategic Plan approved by the Board included three cornerstone concepts to prepare EWEB for
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the future: Be Flexible and Resilient, Enhance Customer Value, and Focus on People – both Customers and Employees. The plan also discusses trade-offs that are often required in order to achieve EWEB’s core mission to enhance our community’s vitality by providing water and electric services consistent with the values of our customer-owners. In assessing those trade-offs, Commissioners indicated that the Electric Utility should improve average bill competitiveness and in order to accomplish that, a slight reduction in Electric reliability would be acceptable given EWEB’s current extremely high reliability. The Water Utility primary trade off was to reduce risk by securing an alternative water source (AWS) and also reducing the average bill competitiveness given the fact that EWEB’s average residential water bill is in the bottom quartile of its comparators. Additional information on bill competitiveness will be provided at the meeting. Management believes that the assumptions used to develop the LTFP address those trade-offs. Overarching Forecast Assumptions The assumptions used in creating forecasts and budgets greatly influence the results. The following assumptions have been used in developing the current forecasts and are anticipated to be used in creating the 2015 budget. Both Utilities
2.5% non-labor CPI increase as per the US Bureau Labor and Statistics, Portland/Salem 10 year average
Labor/Benefits increases: o 2.4% salary escalation based on an average of the Portland/Salem CPI for All Urban
Consumers (CPI-U) and Wages (CPI-W) o PERS increase – 3 percentage points on July 1, 2015, 5 percentage points on July 1,
2017; 3 percentage points on July 1, 2019, 2021, and 2023 $45 million payment to reduce PERS unfunded actuarial liability in 2017
which results in projected total O&M savings of over $2.5 million starting in 2018
o Health insurance increase – 15% in 2015, 10% in subsequent years o Priority Based Budgeting Related O&M Net Change – Electric: $1.5 million increase;
Water: $500,000 increase Major items include:
Information technology major project assistance - $800,000 Harvest Wind warranty extension - $300,000 Regulatory Increases (NERC/Oregon Department of Energy) -
$125,000 System upgrades (Interagency radio system/Customer texting services
for outage management) - $150,000 o Net 3.0 FTE increase
Additions include Electric Distribution Tech, Water Meter Mechanic, Security Systems Coordinator, Work Asset Management Coordinator and Customer Service Specialists
Most positions were funded through reorganizations or other budget reductions
Rate changes effective February
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Electric
Retail load approximately the same as 2014 budget – 2.5 million mWh 90% generation $36 melded mid-market price curve increasing to $58 in 2024 Use of reserves to pay off Harvest Wind note in 2015 Partial year Carmen-Smith generation outages in 2017 and 2023 Reduction in capital expenses from “business as usual” BPA rate increases of 6% in October of odd-numbered years which represents approximately
a 2.5% rate impact to EWEB customers. o BPA rate increases are assumed to be incorporated into February rate proposals
Bond issuances of $15 million and $53.5 million in 2017 and 2022, respectively Water
Consumption: 7.7 million kgals; 300,000 kgals higher than 2014 due to unrealized assumed sensitivity to prior rate changes
AWS major work begins in 2018 Bond issuances of $19 million in 2016; $58 million in 2018; and $21 million in 2021
Long-term Financial Plan Rate Assumptions and Outcomes Electric For the Electric Utility, both 1.5% and 0% February 2015 rate change scenarios are presented along with the resulting projected financial metrics and change in reserves.
Scenario 1 includes selective strategic capital work which is approximately 25% less than “business as usual” and assumes a 1.5% overall average rate change in 2015 and 2.5% to 5% rate increases in the out years of the LTFP.
Scenario 2 also assumes a 2015 1.5% overall average rate increase and the same expense assumptions as Scenario 1. Rate increases in the out years; however, have been reduced in order to make progress towards bringing EWEB’s average bill closer to the middle of our comparator utilities and range from 2.25% to 3.5%. Based on LTFP assumptions, in order to maintain the Board target for debt service coverage, approximately $2 million of reductions would need to occur by 2017.
Scenario 3 focuses on minimizing rate increases in the short term and further reduces capital work over the LTFP by $35 million and assumes a 0% rate increase in 2015, 1.5% rate increases in 2016-2018 with rate increases in the out years ranging from 3% to 6.5%. In order to meet board metrics, $14 million of O&M reductions would be required by 2018. The Electric LTFP outcomes are included in Attachment 1.
Water Water Utility scenarios include a 6.3% and a 5.2% February 2015 rate increase. Scenario 1 assumes a 6.3% overall average rate increase in 2015 and includes the financial impact of AWS construction beginning in 2018 with completion in 2020. Scenario 2 assumes a 5.2% 2015 overall average rate increase with the financial impact of AWS construction spread over 4 years beginning in 2018 with completion in 2021. Both options maintain Board targets for financial metrics for the length of the financial plan. The Water LTFP outcomes are included in Attachment 2.
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Recommendation Management recommends that the Board direct staff to prepare the 2015 budget using the assumptions set forth in this document, a 1.5% February 2015 overall average Electric rate increase and the Selective Strategic Capital Plan which is approximately a 25% reduction from “business as usual”. For the Water Utility, management recommends that the Board direct staff to use a 5.2% February 2015 overall average Water rate increase. Requested Board Action Staff is not requesting Board action at the July 22nd meeting; however, staff is requesting that the Board provide clear direction on the assumptions to be used in developing the 2015 budget. Attachment 1 – Summary of Electric LTFP Rate Assumptions and Outcomes Attachment 2 – Summary of Water LTFP Rate Assumptions and Outcomes
Attachment 1 Attachment 1 –– Summary of Electric LTFP Rate Assumptions and Summary of Electric LTFP Rate Assumptions and OutcomesOutcomes(Dollars in $000’s)(Dollars in $000’s)
Borrowing assumptions $19,000 $57,800 $21,500 $98,300Days Cash on Hand 90 245 277 355 345 240 170 95 109 111 125
Attachment 2 – Summary of Water LTFP Rate Assumptions and Outcomes ($000s omitted)
Selective Strategic Capital Work‐ Overall 10% decrease in Capital, AWS construction spread over 4 years
Present Model‐ Current course on capital construction, AWS
construction spread over 3 years#1
#2
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M E M O R A N D U M
EUGENE WATER & ELECTRIC BOARD
TO: Commissioners Simpson, Brown, Helgeson, Manning and Mital
FROM: Cathy Bloom, Finance Manager; Sue Fahey, Fiscal Services Supervisor; Edward Yan, Senior Financial Analyst; Tom Williams, Key Account Manager DATE: July 3, 2013
SUBJECT: Comparative Rate Analysis OBJECTIVE: Information only Issue This comparative rate analysis is provided to assist the Board in strategic decision making. Background The last comparative rate analysis was presented to the Board in June 2012. Discussion The report provides a comparison of 13 electric utilities and 16 water providers in sixteen Northwest communities, including Eugene. It displays the rankings of EWEB in five customer profiles in comparison to the other communities.
Oregon Washington Beaverton Coburg Bellevue Corvallis Cottage Grove Everett Creswell Eugene Seattle Junction City Portland Tacoma Salem Springfield Vancouver Veneta The communities were selected due to their common characteristics. They are served by a mix of public and private electric providers and typically receive municipal water service. They all participate, to varying extents, in the federal power system and have similar weather patterns. Customer Profiles In order to account for tiered rates and summer/winter differentials, monthly bills for each profile were calculated in this analysis. Residential Apartment – This profile assumes that a residential apartment will use a total of 570 kWh of electricity and 3 kgal of water per month. It should be noted that, in most cases, water is included in the rent of an apartment and not billed separately.
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Residential House – This profile is a weatherized residential home of a family of four, with an electric heat pump as the primary heating source. Although there are many heating configurations in the community, this is a relatively common design. It has an average consumption of 1,600 kWh of electricity and 7 kgal of water per month. Small General Service – Based on a campus area restaurant, this profile assumes the usage of just above 8,000 kWh of energy plus 21 kW of demand and 14 kgal of water per month. Medium General Service – Represented by a major grocery store with an electric consumption of 164,000 kWh of energy with 290 kW demand and 250 kgal of water per month. Large General Service – Based on the sample of a forest product processor and reseller. Average electric consumption of 630,000 kWh with 1,140 kW of demand and 800 kgal of water per month. Summary Results of EWEB’s ranking are summarized in the table below. (1st = lowest)
Customer Profile ELECTRIC (Out of 13)
WATER (Out of 16)
COMBINED (Out of 16)
Residential Apartment 9th 10th 8th
Residential House 10th 4th 7th
Small General Service 8th 4th 6th
Medium General Service 9th 7th 10th
Large General Service 6th 7th 5th For the typical residential home customer, electric ranked tenth out of thirteen communities this year compared to ninth out of thirteen in 2012. On the water side, even after the 2013 20% rate increase EWEB is still in the bottom quartile of comparators and maintained its 2012 ranking. For combined electric and water services, the typical residential home ranked seventh in 2013, one slot above its 2012 position. The combined ranking is not directly comparable to the individual electric and water ranking due to the fact that certain electric utilities service more than one community. It is important to note that this analysis is a snapshot in time and that periodic rate revisions will change the results. Recommendation / Board Action This memo is for informational purposes. No board action is requested. If you have any questions, please contact us at [email protected] (541-685-7390) or [email protected] (541-685-7160). Attachment: Comparator Information
$89.96
$123.77 $126.22$138.28 $142.56 $144.41 $145.20
$152.48 $157.53 $159.14$168.00 $173.45 $176.08
0
20
40
60
80
100
120
140
160
180
200
SUB Tacoma Salem Electric
EPUD Vancouver Everett Lane Electric Seattle Bellevue EWEB Blachly-Lane PGE Pacific Power
Dol
lars
Northwest
Monthly Residential - House (1,600 kWh)
* EPUD and Lane Electric serve surrounding rural areas and small towns in Lane County.* PGE serves Portland & Beaverton.* Pacific Power serves Corvallis, Junction City, Coburg, Creswell & Cottage Grove, and portions of Portland metropolitan area.
EPUD Vancouver Everett Lane Electric Seattle Bellevue EWEB Blachly-Lane PGE Pacific Power
Dol
lars
Northwest
Monthly Residential - House (1,600 kWh)
* EPUD and Lane Electric serve surrounding rural areas and small towns in Lane County.* PGE serves Portland & Beaverton.* Pacific Power serves Corvallis, Junction City, Coburg, Creswell & Cottage Grove, and portions of Portland metropolitan area.