OCTOBER 19, 2018 Setting the date for the public Review of 2019 hearing on November 14 Annual Operating 2018 Budget Amendment 2019 Annual Budget Adoption Budget and Capital Improvement Plan
2 BUDGET FOUNDATION CFU 2018- Adopted 2027 March 14, 2018 Strategic Plan Vision: Cedar Falls Utilities Mission: To provide our strives to achieve a standard customers with CFU of excellence as an industry innovative, high-quality Mission & leader and a trusted utility services that Vision provider of utility services to bring the best value to its customers and the community. community. Employee Ethical & CFU Core Customer Teamwork and Responsible Innovation Values Focus Personal Behavior Growth Three Pillars Customer Employee Fiscal of Success Satisfaction Enthusiasm Responsibility
3 OFFICE STAFF SATISFACTION 2017 Customer FIELD STAFF SATISFACTION Survey
4 EMPLOYEE SURVEY – 2017 RESULTS In 2016, the 5 point scale was changed as compared to 2015 Agree was changed to Strongly Agree = 5 Disagree was changed to Strongly Disagree = 1 2015 2016 2017 Overall Satisfaction 5 4.69 4.61 4.48 4.48 4.33 4.32 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 JOB CFU
5 RESIDENTIAL REPORT CARD CFU Residential Report Card For the period June 2017 - May 2018 Average Bill (per year) City Franchise Population Electric Gas Water Cable TV Internet Total Cedar Falls Utilities $3,226.95 41,390 $1,017.29 $518.38 $245.28 $960.00 $486.00 Electric Gas CFU Ranking of 21 na na 1st 1st 4th 1st 1st 1st Larger than Cedar Falls na 0% Ames 66,191 $1,140.25 $715.51 $291.48 $1,126.80 $839.88 $4,113.91 Davenport 0% 0% 102,612 $1,073.00 $561.23 $294.12 $1,114.68 $839.88 $3,882.91 Des Moines 5% 5% 215,472 $1,127.96 $616.44 $285.96 $1,120.32 $839.88 $3,990.56 Cedar Rapids 3% 3% 131,127 $1,676.55 $578.06 $493.08 $1,119.36 $839.88 $4,706.94 Council Bluffs 2% 2% 62,524 $1,095.74 $689.64 $308.16 $1,019.88 $923.88 $4,037.29 5% 5% Dubuque 58,531 $1,709.11 $709.92 $269.64 $1,091.16 $839.88 $4,619.71 1% 1% Iowa City 74,398 $1,083.73 $566.84 $290.40 $1,074.12 $839.88 $3,854.97 5% 5% Sioux City 82,872 $1,064.53 $616.44 $345.84 $1,187.40 $540.00 $3,754.21 3% 3% Waterloo 67,934 $1,044.26 $604.70 $184.91 $1,121.40 $839.88 $3,795.15 West Des Moines 5% 5% 64,560 $1,127.96 $616.44 $320.04 $1,120.32 $839.88 $4,024.64 Smaller than Cedar Falls 0% 0% Fort Dodge 24,441 $1,073.00 $561.23 $273.00 $1,115.04 $839.88 $3,862.15 Indianola 5% 3% 15,785 $1,271.00 $604.70 $355.44 $1,120.32 $839.88 $4,191.34 Keokuk 0% 0% 10,431 $1,627.72 $750.13 $286.32 $1,120.08 $839.88 $4,624.13 Marshalltown 0% 0% 27,328 $1,627.72 $715.51 $228.00 $1,126.80 $839.88 $4,537.91 Mason City 0% 0% 27,430 $1,627.72 $715.51 $502.32 $1,130.64 $839.88 $4,816.07 Muscatine na 1% 23,914 $1,124.42 $722.66 $241.68 $1,043.88 $791.88 $3,924.52 Newton 0% 0% 15,034 $1,627.72 $676.12 $268.08 $1,126.80 $839.88 $4,538.60 0% 0% Ottumwa 24,487 $1,627.72 $561.23 $424.20 $1,122.12 $839.88 $4,575.15 na 0% Pella 10,255 $1,139.12 $715.51 $422.16 $1,126.80 $839.88 $4,243.47 Waverly na 0% 10,093 $1,404.14 $587.09 $438.00 $1,001.40 $599.40 $4,030.03 Average of Peer Communities $1,314.67 $644.24 $326.14 $1,106.47 $814.66 $4,206.18 Typical annual savings for a household with electric, natural gas, water, cable TV and internet service = $979.23 (Compared with Average of Peer Communities)
6 RESIDENTIAL COMMUNITY SAVINGS
7 Overall 2019 Budget Review Operating Budget Capital Improvement Plan
8 2018 STATE BUDGET AMENDMENT Expenditures reforecast higher due to addition of the 2010B debt redemption and slightly higher operating expenses
9 2019 STATE BUDGET CERTIFICATION Electric Gas Water Comm Total Beginning Fund Balance $35,655,389 $12,323,486 $4,359,721 $5,335,649 $57,674,245 Revenues & Other Financing Sources Debt Issuance Costs $0 $0 $0 $0 $0 Use of Money & Property 432,214 84,000 22,000 11,000 549,214 Operating Revenues 54,169,640 11,200,033 4,648,459 21,564,554 91,582,686 Miscellaneous Revenues 1,273,667 13,584 192,000 47,712 1,526,963 Total Revenues & Financing Sources $55,875,521 $11,297,617 $4,862,459 $21,623,266 $93,658,863 Expenditures & Transfers Out Operating Expenditures $44,068,627 $10,053,336 $3,390,953 $14,985,162 $72,498,078 Capital Outlays 8,448,710 1,712,370 2,429,730 4,858,190 17,449,000 Interest Payments 849,375 0 0 0 849,375 Principal Payments 2,490,000 0 0 0 2,490,000 Accrual Adjustments 19,875 0 0 0 19,875 Total Expenditures & Transfers Out $55,876,587 $11,765,706 $5,820,683 $19,843,352 $93,306,328 Excess of Revenues & Other Sources ($1,066) ($468,089) ($958,224) $1,779,914 $352,535 Ending Fund Balance $35,654,323 $11,855,397 $3,401,497 $7,115,563 $58,026,780 Operating expenditures = expenses less depreciation, interest expense & pension/post employment expenses
10 2019 TOTAL OPERATING REVENUES & EXPENSES Combined Revenues: $91.5 million Combined Expenses: $85.7 million
11 2019 CAPITAL IMPROVEMENT PLAN BUDGET Combined 2019 CIP is $17,449,000
12 Percent of Total Expenses 2018 Published 2018 Reforecast 2019 Budget Commodities 48.4% 49.2% 47.6% MAJOR Compensation & Related Costs 22.3% 21.1% 22.5% Depreciation 14.8% 14.2% 15.3% OPERATING Materials, Supplies, Services 7.8% 8.8% 8.7% PILOT 3.9% 3.9% 3.7% EXPENSES Interest on Debt 1.3% 1.5% 0.7% Insurance 0.9% 0.8% 1.0% Property Taxes 0.6% 0.5% 0.5%
13 COMMODITY EXPENSES Purchases for Resale is for MISO power purchases to serve load Coal Usage includes the fuel as used by the Western Units and Streeter Station
14 ENERGY INCENTIVES BUDGET Does not include Low Income Energy Assistance Program (LIEAP), which has a 2019 budget of $86,740
15 COMPENSATION BUDGET – PERFORMANCE MERIT Non-Union: New Pay for Performance and Wage Schedule approved in 2017 Recommendation for Non-Union Wage Schedule: Adjust Wage Schedule Structure by 2.3% • Midpoint of all ranges is adjusted up by 2.3% • Recommendation of Consultant in order to not fall behind market Merit increases of 3% on average • Average pay increases are expected to rise 2.8% for middle performers (3% median) and rise 4% for high performers ( according to World @ Work ) Placeholder of 3% in budget will cover all of the above December Board meeting: Resolution to specifically approve final recommendation Union: Last year of multi-year contract is 2019-2020 3% pay increase effective 07/06/2019 Fall of 2019 – Union recertification election
16 COMPENSATION BUDGET – TOTAL PAYROLL AND BENEFITS Benefits are the costs of providing medical, dental, life, 457 match, IPERS & FICA contributions Capital Labor is the cost of building new infrastructure using internal staff O&M Labor is the cost of operations, maintenance, administrative, & general services by internal staff
17 BUDGETED STAFFING
18 AVERAGE CUSTOMER COUNTS
19 PAYMENT IN LIEU OF TAXES (PILOT) Current budgeted PILOT payments Accrual basis, Cash payments occur in the following year
20 GENERAL PLANT CAPITAL IMPROVEMENT PLAN Called out items are owned by Electric, Gas, & Water in some combination or only owned by the Electric Utility and rented to other utilities through operating expenses.
21 Electric Utility 2019 Budget Review
22 ELECTRIC UTILITY – REVENUES & EXPENSES Net Operating Income = Operating Revenues less Operating Expenses
23 ELECTRIC UTILITY - COMMODITIES Costs of fuel used in generation and purchased power from MISO Used in calculations for Net Energy Cost Adjustment and Western Unit Revenue Sharing
24 ELECTRIC UTILITY – CAPITAL IMPROVEMENT PLAN
25 ELECTRIC UTILITY – SOME DETAILED CIP
26 ELECTRIC UTILITY – KEY RATIOS 2018 2018 2019 2020 Measures Goal Published Reforecast Budgeted Projected Debt Service Coverage-All Debt 1.75+ 2.37 2.62 3.49 3.45 Debt Service Coverage-Revenue Debt 1.75+ 2.37 2.62 3.49 3.45 Cash as a % of Operating Expenses 50%+ 61.58% 71.18% 64.77% 58.35% (without Depreciation, PILOT, & NPL/OPEB exp) Net Operating Income as a % of Revenue (NOI) 6%+ 2.34% 6.91% 4.26% 4.65% Net Income as a % of Revenue 6%+ 3.94% 8.21% 6.39% 6.05% Cash Surplus (Deficit) after Legal & Board Zero $7,367,259 $11,094,554 $9,508,893 $7,441,732 Recommended Reserves No new debt is planned. Paying off 2010A and 2010B Electric Revenue Bonds 12-1-18 using cash reserves
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