Gainesville Regional Utilities Presentation to Fitch November 17, 2015
Overview • Management Team • Policy Updates • Financial Strength • Financial Metrics 2
The Management Team has Extensive GRU and Utility Experience Edward J. Bielarski General Manager Robin L. Baxley Shayla L. McNeill Office Coordinator Utilities Attorney To Be Determined Thomas R. Brown Michelle Smith Lambert Justin M. Locke Chief Information Chief Operating Officer Chief Change Officer Chief Financial Officer Officer David E. Beaulieu Energy Delivery Officer David E. Owens Cheryl F. Compliance S. Yvette Carter Margaret A. William J. Lewis J. Walton McBride Officer Crawford Shepherd Community Human Chief Business Chief Customer Relations Communications David M. Resources Services Officer Officer Director Director Richardson Director Water/ Wastewater Officer John W. Stanton Energy Supply Officer 3
System Highlights Electric System Service Area n The electric facilities of the System currently service approximately 124.5 square miles of the County, and approximately 76% of the population of the County, including the entire City (except of the University of Florida campus) n Owner of various generation, transmission and distribution facilities n Of the 94,473 customers in the fiscal year ending September 30, 2015, 10,677 commercial and industrial customers provided approximately 53% of revenues n FY15 Fuel mix: Coal (37%), Biomass (23%), Natural Gas (28%), Other (12%) n Fuel and power risk management via The Energy Authority n Stable customer base Source: GRU Energy Delivery Service Guide (October 22, 201 4) n Generation portfolio includes significant renewable energy Water System Wastewater System Natural Gas System n 1,139 miles of water transmission n 631 miles of gravity sewer collection n Acquired from the Gainesville Gas and distribution lines throughout the system, 165 pump stations with 139 Company in 1990 to provide gas Gainesville urban area miles of associated force main distribution throughout the City n Water treatment plant (1976 COD) n 2 major wastewater (1977 and 1930 n Underground gas distribution and with capacity of 54 million gallons COD) treatment plants totaling 22.4 service lines, six points of delivery per day ("Mgd") Mgd annual average daily flow of or interconnections with Florida Gas capacity Transmission Company, and metering and measuring equipment Management believes that the System is operating in compliance in all 4 material respects with all permits, licenses and approvals and with all applicable federal, state and local regulations, codes, standards and laws.
Policy Updates City Commission Initiatives • Governance – City Commission is on the first reading of an ordinance creating a stronger advisory board – Talks continue on support of Keith Perry’s legislation placing a referendum before Gainesville voters for an independent board – Possibility exists for City referendum for an independent board 5
Electric System Generating Facilities Net Summer Unit No. Primary Fuel Alternative Fuel Capability (MW) J.R. Kelly Station — Steam Unit 8 Waste Heat 37.00 Owned Generation Combustion Turbine 4 Natural Gas Distillate Fuel Oil 75.00 Deerhaven Generating Station — Steam Unit 2 Bituminous Coal 232.00 Steam Unit 1 Natural Gas Residual Fuel Oil 75.00 Combustion Turbine 3 Natural Gas Distillate Fuel Oil 75.00 Combustion Turbine 2 Natural Gas Distillate Fuel Oil 17.50 Combustion Turbine 1 Natural Gas Distillate Fuel Oil 17.50 South Energy Center — SEC-1 Natural Gas 3.50 Owned Total 532.50 Gainesville Renewable Energy Center PPA — GREC Biomass 102.50 Total Dispatchable 635.00 Base Landfill Landfill Gas 3.00 Grand Total 638.00 6
Increasing Revenue by Optimizing System Capacity • Developing new template for wholesale power contracts • Leveraging relationships with long time customers – City of Alachua – University of Florida • Completion of South Energy Center Expansion 7
Reducing Expenses through Contract Enforcement with GREC • Benefit from GREC shutdown to purchase lower power prices off grid and operate fleet at optimal levels • Lower availability payments to GREC based on application of ramp-up schedules • Pursuing arbitration on use of dollars/euro index as construction cost adjuster 8
Residential Electric Customer 1,000 kWh Bill Change Approved FY15 Budget Percentage Base Rate Percentage Fuel Revenue Increase Adjustment Increase Total Bill Increase 2015 -8.50% 13.04% 0.97% Approved 2016 3.50% 3.85% 3.70% Projected 2017 3.00% 2.47% 2.70% 2018 0.00% 1.20% 0.70% 2019 0.00% 1.19% 0.70% 2020 0.00% 0.00% 0.00% Approved FY16 Budget Percentage Base Rate Percentage Fuel Revenue Increase Adjustment Increase Total Bill Increase Restructured 2016 0.00% 0.00% (0.9)% Residential Rates 2017 2.00% 2.56% 2.3% Projected 2018 1.75% 2.50% 2.3% 2019 0.50% 0.00% 0.9% 2020 0.00% 0.00% 0.9% Note: Base Rate Revenue Increases represent an increase on the total 9 base rate revenue requirement, and does not translate directly into an overall bill increase due to the different tiers and fuel component.
Total Residential Bill Projected Change Approved FY15 Budget 2015 2016 2017 2018 2019 2020 Electric $1.35 $5.30 $3.90 $2.00 $2.00 $2.00 Gas $2.36 $0.99 $2.38 $0.74 $0.49 $0.99 Water $0.50 $0.80 $0.00 $0.00 $0.00 $0.00 Wastewater $1.95 $2.35 $2.35 $0.00 $0.00 $0.00 Total $6.16 $9.44 $8.63 $2.74 $2.49 $2.99 Approved FY16 Budget 2015 2016 2017 2018 2019 2020 Electric $1.35 $(1.25) $3.22 $3.25 $1.27 $1.30 Gas $2.36 $0.95 $0.00 $0.25 $0.00 $0.00 Water $0.50 $2.80 $2.05 $0.80 $0.00 $0.00 Wastewater $1.95 $1.35 $2.10 $0.90 $0.00 $0.00 Total $6.16 $3.85 $7.37 $5.20 $1.27 $1.30 10 Based on 1,000 kWh electricity, 25 therms natural gas, 7,000 gallons water and 7,000 gallons wastewater.
FINANCIAL METRICS 11
Five Year Flow of Funds 2016 2017 2018 2019 2020 Total Revenue $ 407,577,523 $ 427,838,856 $ 437,516,202 $ 438,674,334 $ 445,242,432 $ 271,987,584 $ 287,794,341 $ 296,248,902 $ 297,437,447 $ 304,396,234 Total O&M Expenses Net Revenues $ 135,589,939 $ 140,044,515 $ 141,267,300 $ 141,236,887 $ 140,846,198 Uses of Net Revenues Debt Service Less BABS $ 56,355,741 $ 58,829,759 $ 58,520,255 $ 60,277,216 $ 60,249,155 UPIF used to pay DS $ - $ - $ - $ - $ - UPIF $ 43,778,139 $ 45,204,895 $ 46,175,074 $ 43,817,159 $ 42,875,432 General Fund Transfer $ 35,456,059 $ 36,009,861 $ 36,571,971 $ 37,142,512 $ 37,721,611 Working Capital Reserve $ - $ - $ - $ - $ - Total Uses of Net Revenues $ 135,589,939 $ 140,044,515 $ 141,267,300 $ 141,236,887 $ 140,846,198 Net Revenue/(Deficit) $ - $ - $ - $ - $ - Debt Service Coverage 2.41 2.38 2.41 2.34 2.34 12
Debt Service Coverage Continuing to Improve Coverage Ratios Total Debt Service Coverage 3.00 Times Coverage 2.50 2.00 1.50 1.00 0.50 0.00 Fiscal Year Note: 2015 Forward Projected 13
Financial Risk Management Developing Cash Liquidity Targets FY 2016 Estimated Cash at Risk Electric Gas Water Wastewater GRUCom Liquidity Targets Revenue at Risk 1 $ 9,614,370 $ 1,163,844 $ 2,484,394 $ 2,489,614 $ 554,037 $ 16,306,258 60 Days Fixed Non-Fuel O&M 2 $ 23,189,869 $ 2,558,211 $ 5,430,293 $ 6,745,208 $ 1,670,559 $ 39,594,140 Uninsured Property Exposure 3 $ 6,732,902 $ 1,265,715 $ 3,593,977 $ 3,290,295 $ 1,428,876 $ 16,311,766 Construction Risk 4 $ 2,671,635 $ 293,706 $ 560,557 $ 859,037 $ 296,385 $ 4,681,321 Total $ 42,208,775 $ 5,281,476 $ 12,069,222 $ 13,384,155 $ 3,949,856 $ 76,893,484 1. Cash Flow at Risk at a 97.5 % Confidence Level or only a 2.5% change that the sales shortfalls will be greater than the reserved amount 2. Sixty days of average non-fuel operating expenses 3. A percentage of the value of self insured distributed assets plus the deductible applicable to insured assets 4. Five percent of expected annual capital expenses 14
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