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Home My WebLink AboutPACKET Utilities Committee 2007-08-16AGENDA TOWN OF ESTES PARK UTILITIES COMMITTEE 8:00 a.m. Thursday, August 16, 2007 Preparation date: August 8,2007 *Revision date: August 14,2007 ACTION ITEMS PUBLIC COMMENT Light and Power Department 1. Budgeted Light & Power Bucket Truck Replacement (93325A) a. Request approval to trade in Equipment 93325A and purchase new 2007 International 7400 - 4x4 w/Altec AM855 Series Aerial Bucket *2. Engineering of Duct Bank for Substation to Substation Fccdcr Ties b. Request to proceed using City of Lovcland ICA 3. Section 3 Light and Power Financial Plan: Financial Plans for the Water, Light and Power Utilities, and the General and Community Reinvestment Funds, HDR Engineering, March 2007 a. Request acceptance of Financial Plan and implementation of proposed Light and Power rate increases for 2008, 2009, 2010 Water Department 1. Section 2 Water Utility Financial Plan: Financial Plans for the Water, Light and Power Utilities, and the General and Community Reinvestment Funds, HDR Engineering, March 2007 a. Request acceptance of Financial Plan and implementation of proposed Water rate increases for 2008, 2009, 2010 REPORTS: Light and Power 1. Light and Power Financial Reports Water 1. Water Financial Reports Note: The Utilities Committee reserves the right to consider other items not available at the time the agenda was prepared. 7 : hp LaserJet 3015 HP LASERJET FAX invent Aug-14-2007 3:09PM Fax Call Report Job Date Time Type Identification Duration Pages Result 625 8/14/2007 3:05:30PM Send 5869561 0:39 1 OK 626 8/14/2007 3:06:15PM Send 5869532 0:37 1 OK 627 8/14/2007 3:06:57PM Send 5861691 0:45 1 OK 628 8/14/2007 3:07:47PM Send 6353677 0:36 1 OK 629 8/14/2007 3:08:28PM Send 5771590 0:46 1 OK AGENDA TOWN OF ESTES PARK UTILITIES COMMITTEE 8:00 a.m. Thursday, August 16, 2007 Preparation date: August 8,2007 ACTION ITEMS PUBLIC COMMENT Light and Power Department 1. Budgeted Light & Power Bucket Truck Replacement (93325A) a. Request approval to trade in Equipment 93325A and purchase new 2007 International 7400 - 4x4 w/Altec AM855 Series Aerial Bucket 2. Engineering of Duct Bank for Substation to Substation Feeder Ties a. Request to proceed using City of Loveland IGA 3. Section 3 Light and Power Financial Plan: Financial Plans for the Water, Light and Power Utilities, and the General and Community Reinvestment Funds, HDR Engineering, March 2007 a. Request acceptance of Financial Plan and implementation of proposed Light and Power rate increases for 2008, 2009, 2010 Water Department 1. Section 2 Water Utility Financial Plan: Financial Plans for the Water, Light and Power Utilities, and the General and Community Reinvestment Funds, HDR Engineering, March 2007 a. Request acceptance of Financial Plan and implementation of proposed Water rate increases for 2008, 2009, 2010 REPORTS: Light and Power 1. Light and Power Financial Reports Water 1. Water Financial Reports Note: The Utilities Committee reserves the right to consider other items not available at the time the agenda was prepared. i r. hÂ® hp LaserJet 3015 I 0t HP LASERJET FAX invent Aug-14-2007 9:00AM Fax Call Report Job Date Time Type Identification Duration Pages Result 612 8/14/2007 8:56:53AM Send 5869561 0:39 1 OK 613 8/14/2007 8:57:37AM Send 5869532 0:36 1 OK 614 8/14/2007 8:58:19AM Send 5861691 0:44 1 OK 615 8/14/2007 8:59:08AM Send 6353677 0:36 1 OK 616 8/14/2007 8:59:49AM Send 5771590 0:47 1 OK â€¢ AGENDA TOWN OF ESTES PARK UTILITIES COMMITTEE 8:00 a.m. Thursday, August 16,2007 Preparation date: August 8,2007 *Revision date: August 14, 2007 ACTION ITEMS PUBLIC COMMENT Light and Power Department 1. Budgeted Light & Power Bucket Truck Replacement (93325A) a. Request approval to trade in Equipment 93325A and purchase new 2007 International 7400 - 4x4 w/Altec AM855 Series Aerial Bucket *2. Enginooring of Duct Bank for Substation to Substation Foodor Ties b. Roquost to procood using City of Loveland IGA 3. Section 3 Light and Power Financial Plan: Financial Plans for the Water, Light and Power Utilities, and the General and Community Reinvestment Funds, HDR Engineering, March 2007 a. Request acceptance of Financial Plan and implementation of proposed Light and Power rate increases for 2008, 2009, 2010 Water Department 1. Section 2 Water Utilitv Financial Plan: Financial Plans for the Water, Light and Power Utilities, and the General and Community Reinvestment Funds, HDR Engineering, March 2007 a. Request acceptance of Financial Plan and implementation of proposed Water rate increases for 2008, 2009, 2010 REPORTS: Light and Power 1. Light and Power Financial Reports Water 1. Water Financial Reports Note: The Utilities Committee reserves the right to consider other items not available at the time the agenda was prepared. TOWN of ESTES PARK . Inter-Office Memorandum August 7,2007 6 TO: Utilities Committee FROM: Bob Goehring /Dave Mahany SUBJECT: Budgeted Light & Power Bucket Truck Replacement (93325A) Background: The 2007 Light & Power Department budget includes $260,000.00 for the replacement of Bucket Truck 93325A, which is a 1996 International 4900 Series 4x2 Truck, 11 years old with 7,850 hrs / 67,540 miles. (Replacement type 13 / Policy 8,500 - 9,000 hrs or 12 years; this vehicle is not included in the replacement fund). This truck is equipped with a Bucket Aerial Device used by the line crew for aerial line and transformer repairs. Light and Power Department would like to replace this vehicle with a similar aerial device on a 4x4 chassis. Our choices on aerial devices are limited by the storage building door height of 12' and the taller chassis due to Tier III emissions. Cost/Budget: Cost: â€¢ Altec Industries - Denver Co. / St. Joseph, MO. 2007 International 7400 - 4x4 w/Altec AM855 Series Aerial Bucket "Meets Specifications" (Height 11'119 .$226,451.00 Trade-in: Equipment #93325A 1996 International 4900 Series w/Altec AA600L Aerial Bucket ........ ...... $ 15,000.00 Bid Price: $211,451.00 â€¢ Terex Utilities - Denver Co. / Watertown SD. "Did not meet Specifications" 2007 International 7400 - 4x4 w/Hi-Ranger HRX55 Series Aerial Bucket ...$221,017.00 Trade-in: Equipment #93325A 1996 International 4900 Series w/Altec AA600L Aerial Bucket ............... $ 15,000.00 Bid Price: $ 206,017.00 Specs not met: Height 12'3't spec max 12' / Upper Boom Articulate 194 degree - spec 230 degree / Stacked Boom (higher center of gravity), spec Side by Side / Outrigger 8", spec 11"for better stability in mountains. SAFETY ITEMS: No step in bucket.fbr enter-exit / Bucket control not insulated nor interlock guard provided. â€¢ Versalift Utilities - Colorado Springs Co. / Waco, TX. Letter declining to bid, 8-1-07 ..... . DECLINED TO BID Budget: $260,000.00 Cost: $211,451.00 Action: Staff recommends: Trading in Equipment 93325A and purchasing a new 2007 International 7400 - 4x4 w/Altec AM855 Series Aerial Bucket from Altec Industries, St. Joseph MO. for a cost of $211,451.00. I-1 1-1 TOWN of ESTES PARK Utilities Department ESTES PARK INTER-OFFICE MEMORANDUM COLORADO DATE: August 8,2007 TO: Utilities Committee FROM: Bob Goehring SUBJECT: Section 3 Light and Power Financial Plan: Financial Plans for the Water, Light and Power Utilities, and the General and Community Reinvestment Funds, HDR Engineering, March 2007 Background: In January of 2007, HDR Engineering presented a Light and Power Department Financial Plan to the Utilities Committee for review. HDR incorporated committee comments and completed this plan in March of 2007. The plan recommends rate adjustments of + 2.5% for each consecutive year from 2008 to 2013. These adjustments reflect a cumulative increase of 15.97% by 2013. These rate adjustments are necessary in order to fund the Capital Improvement Plan including: the Mary's Lake substation expansion and increase in size from 20 MW to 50 MW; and Mary's Lake substation to Estes substation 600 amp duet bank. These improvements will ensure electrical system redundancy and reliability. The Overview of the Financial Planning Process is attached (Attachment 1), along with the section of the plan detailing the Development of the Light and Power Financial Plan (Attachment 2) The proposed rate adjustments will allow the Light and Power Department to do the Mary's Lake substation expansion and Mary's Lake substation to Lake Estes substation, 600 amp duet bank and still have a healthy fund balance of $2,400,000 in 2013. Cost/Budget: 2008 1. Mary's Lake substation expansion $4,000,000 2. Mary*!~als@_substation_to.Estes.substation, 600 amp duet bank $2,400,000 Action: Staff requests acceptance of the Light and Power Utility Financial Plan by HDR Engineering, March 2007, and recommends increasing the electric rates by a 2.5% each year 2008,2009 and 2010. In 2010, conduct an update of the Light and Power Financial Plan and recalculate any additional rate increases. BG/Imvbs Attachments 3-1 . Section 1 Overview of Financial Planning Process 1.1 Introduction HDR Engineering (HI)R) was retained by the Town of Estes Park (Town) to complete financial plans for the water utility, light and power utility, and the general and community reinvestment fund. The purpose of these studies was to determine the relative financial/rate impacts to the Town and to provide the basis for adjustments to meet operating and capital needs of the Town. 7 In developing and establishing financial plans, there are "In developing and establishing utility rates, i "generally accepted" principles or guidelines around which a 1 financial plan should be completed. This section of the report there are "generally accepted" principles or provides a general overview of the methodology and guidelines used for the financial plan completion for each of the funds. guidelines around which Jinancialplans should This should give the reader a better understanding of the be completed." general process that is detailed later in this report. lip s;UN'44 4 Ll/1.2 1.2 Method of Accumulating Costs The convention used by most public entities to establish their revenue requirements is called the cash-basis approach. As the name implies, a public utility aggregates its cash expenditures for a period of time to determine its required revenues from user rates and other forms of income. This methodology conforms nicely to most public agency budgetary requirements, and is a straightforward and easily understood calculation. Operation and maintenance (0&M) expenses are added to any applicable taxes or transfer payments to determine total operating expenses. Capital costs are calculated by adding debt service payments (principal and interest) to capital improvements financed with operating rate (or tax) revenues. Depreciation expense is sometimes included in lieu of this latter item to stabilize annual revenue requirements. Under the cash basis of accounting, the sum of the capital and operating expense equals the utility' s revenue requirement during any period of time. It should be noted that the two portions of the capital expense component (debt service and capital improvements funded from rates) are necessary under the cash basis approach because utilities and other entities generally cannot finance all of their capital facilities with long-term debt. Table 1-1 summarizes the cash basis methodology. Table 1-1 Overview of the Cash Basis Methodology + 0&M Expense + Taxes or Transfer Payments + Capital Additions Financed with Rate Revenues (2 Depreciation Exp.) + Debt Service (P+I) = Total Revenue Requirements F D~ Town of Estes Park Overview of Financial Planning Process 1-1 2.9 JU- 1.3 Prudent Financial Guidelines There are three key financial indicators that should be considered in the development of any utility financial plan, or revenue requirement. These three indicators are: capital projects funded from rates, debt service coverage ratio, and reserve levels. The following discussion provides a brief overview of each of these financial planning guidelines. Capital Projects Funded From Rates - Prudent financial planning dictates that a utility should fund a certain portion of capital improvement projects from rates on an on-going basis. The same is the case for general funds; a certain minimum portion should "...an increased T be funded by taxes. The general financial guideline used is that at a minimum, a utility should fund an amount equal to or greater than level Of capital annual depreciation expense. However, there are three reasons for funding from rates increasing the level of capital funding through rates. The first is that, will strengthen the ~: funding levels over and above depreciation expense better reflect utilities' debt service actual replacement cost of facilities. Second, increasing the level of coverage ratio." capital funding will help provide cash fiow to fund the capital plan in E-- . --- "-t .1 --- future years, and minimize future long-term borrowing needs. Third, an increased level of capital funding from rates will strengthen the utilities' debt service coverage ratio. Debt Service Coverage Ratio -The debt service coverage ratio is an important financial measure that is reviewed by bond rating agencies and banks to evaluate an entity' s ability to make debt payments. This ratio is calculated by subtracting total O&M and taxes from total revenues. The resulting figure is then divided by the amount of annual revenue bond debt service payments to determine the utility's debt service coverage ratio. Typically, most bond covenants require at least a minimum debt service coverage ratio of 1.25. A strong debt service coverage ratio may provide the benefit of a higher bond rating and potentially lower interest costs (i.e. lower risk equates to lower interest rates). Currently, the Town strives to maintain a debt service coverage ratio above 1.25. Reserve Levels - Reserve levels are a crucial part of a utility' s financial picture. Typically utilities maintain several different types of reserve funds. These may include: an operating reserve, a capital reserve, an emergency or contingency reserve, and a rate stabilization reserve. Each of these reserves has its own financial, operating or legal requirements which may set an established minimum reserve level (e.g. a bond reserve). A key aspect of reviewing reserve levels was determining target minimum levels for the Town' s current reserves. It is important to remember that when reserves fall below the targeted minimum level, management should review the cause of the declining reserves and determine what action, if any, should be taken. Maintenance of minimum reserve levels should not, on its own, trigger the need for a rate adjustment. However, after two consecutive years of diminishing reserves as a result of not fully covering costs, rates should be reviewed. In the Town' s bond covenants it is stated that a 90-day operating reserve should be maintained. This parameter was also applied to the general fund, as a minimum level to maintain for the operating reserve. However, most general funds maintain a large fund balance due to the myriad of unexpected issues this fund must be able to respond to. Some entities also maintain a separate "rainy day" fund. The bond issues also require that a balance of two percent (2%) of the total 1 777 Overview of Financial Planning process 1-2 1-1~ Town of Estes Park 3- 3 . assets should be maintained as a capital reserve. Reserve levels for each fund are addressed within the next section of the report. 1.4 Summary This section of the report has provided a brief introduction to the general principles and techniques used to develop and complete financial plans. These principles and techniques were the basis for the financial plans and the foundation used to meet the Town' s key objectives in establishing their water, light and power, general fund and community reinvestment financial plans. I.I-r-~ Overview of Financial Planning Process 1-3 11.4~ Town of Estes Park 34-1 . Section 3 Light and Power Financial Plan 3.1 Introduction The effective operation of a light and power utility is dependent upon developing a plan that can be financially supported by the utility, will meet State and local regulatory requirements, provides the flexibility to deal with unanticipated changes, and meets operating as well as capital needs. This section of the report will review the financial plan developed for the Town's Light and Power (electric) utility. Many of the approaches and methodologies used in developing the water utility financial plan were also applied to the Town's Light and Power utility. However, there are major differences between these utilities. Primarily, the service areas are quite different. The Light and Power service area is much larger than the water utility's. Likewise, the number of customers served is greater. There are operational and capital differences as well. Despite these differences, fiscal planning and management is similar, as described in the sections below. This section presents a financial plan that reviews the revenues and expenses for the Town's Light and Power system. The financial plan includes projected operating and capital costs of the system for the same seven-year time horizon (2007-2013) as "The financial plan ' discussed in the water financial plan section. The revenues and was developed on a expenses used in the financial plan were obtained from the "stand alone" basis, i Town' s 2006, 2007 and 2008 budgets in conjunction with such that the utility : historical information. The capital costs contained within this must provide funding : financial plan were based on the capital improvement plan for all operating and + provided by the Town. Future years' operating costs were based capital needs." on 2008 levels escalated out through time. The results of the - , I financial plan outline the annual operating and capital needs of the Town's Light and Power system and determine if the current rate revenues are sufficient to cover costs. In developing the financial plan it was assumed that the utility is an independent enterprise, and must be self-supporting. The financial plan was developed on a "stand alone" basis, such that the utility must provide funding for all operating and capital needs. 3.2 Development of the Financial Plan (Revenue Requirement) The financial plan was developed to determine the utility' s ability to meet its capital improvement and operating needs over the seven-year review period. In developing the financial plan, similar to the water financial plan, fund balance and reserve levels were also analyzed. The financial plan was developed to review the projected revenues and expenses of the Light and Power system for 2007-2013. The Town's 2008 budget was used as a base for the projection of future years' costs. Future years' costs were escalated by applying factors for inflation and growth. I.-I-'r-~ Light and Power Financial Plan 3-1 ILL.ZI Town of Estes Park 3 -5 3.2.1 Projection of Revenues The first component of the Light and Power financial plan was a review of the sources of funds or revenues of the Light and Power system. The different revenues received from operations are: â€¢ Rate revenues - charges for service to customers, â€¢ Investment income, and â€¢ Other revenues - miscellaneous fees Rate revenues for 2006,2007 and 2008 were provided by the Town. Projections for future year revenues were developed by applying a projected growth rate of two percent to the 2008 budgeted rate revenue. The Town is currently experiencing a three percent growth rate; however, for planning purposes a two percent future growth rate was used. Other miscellaneous revenues and investment interest are projected to increase approximately two and three percent respectively through 2013. Rate revenues are projected to be $9.7 million in 2006. With the applied two percent growth rate per year, the rate revenue is projected to increase to $11.5 million by 2013. Other revenues for 2006 are expected to be $380,000 and projected to $600,000 by 2013. The total revenue available to offset operating and capital expenditures of the Light and Power system total $10.7 million in 2006, increasing to $12.1 million by 2013. 3.2.2 Projection of Expenses Next, a review of the application of the funds or expenses of the Light and Power utility was conducted. In developing the financial forecast, four main cost components were reviewed: â€¢ Operations and Maintenance (0&M) Expenses â€¢ Taxes â€¢ Capital Improvements Funded from Rates â€¢ Debt Service The projection of operating expenses for 2006,2007 and 2008 were based on budget documents provided by the Town. Future years' expenses were based on the 2008 budget. These expenses were then projected by applying escalation factors dependent upon the type of expense being reviewed. OPERATION AND MAINTENANCE EXPENSES Using the 2008 budget as a starting point, expenses were escalated by factors representing the assumed inflationary rates to obtain the projected costs. Escalation factors range from employee benefits at an average annual increase of eight percent to miscellaneous expenses at one percent. Labor costs were escalated at three percent and purchased power including assumed wholesale cost increases and customer growth increased at 4.5 percent beginning in year 2011. Purchased power is a major cost component of the Town' s overall revenue requirements. Purchased power costs are approximately $5.0 million per year. It should be noted that no other program cost increases, above budget year 2006 figures, were assumed as part of the projected costs. Total O&M expenses ranged from $8.0 million in 2006 to $10 million in 2013. T..2-~f-) Light and Power Financial Plan 3-2 Ilj~ ~ Town of Estes Park 3-6 TAXES The Light and Power system currently has general fund transfer obligations in the form of payments in-lieu of taxes. This transfer is calculated as 2.5% of the Light and Power utility rate revenues. There is Â·also a general fund transfer of 9% of charges for service, museum, PUC gross receipt of taxes, and a vehicle replacement transfer. For 2007, these transfers total approximately $1.1 million and increase to $1.2 million by 2013. DEBT SERVICE The debt service on the existing debt averages approximately $305,000 per year through 2007. With the assumption of the need for the issuance of a new revenue bond to fund capital improvements to the Light and Power system, new debt payments of $480,000 begin in 2008, raising the annual debt service to $785,000. Meeting debt service coverage requirements is an important financial indicator for well managed utilities. Debt service "With the proposed rate - coverage is a financial measurement of an entity' s ability to repay adjustments approved, debt. A debt service coverage ratio is a comparison of the balance the lowest coverage ratio available for debt service to the total debt service on revenue predicted for the review bonds. Sound financial practices target a minimum of a 1.25 for period would be 2.03 in 2008." the debt service coverage ratio test, while rating agencies prefer a debt service coverage ratio of 1.50 or higher. Within the review r .4. period, there are several years, between 2009 and 2013, that the coverage ratio is slightly higher than 1.5, prior to any rate adjustments. With the proposed rate adjustments approved, the lowest coverage ratio predicted for the review period would be 2.03 in 2008. CAPITAL IMPROVEMENTS FuNDED FROM RATES Capital improvement projects are related to the infrastructure of a utility. Capital improvement projects are generally divided into two categories: capital improvements related to renewal and replacement of existing and depreciated facilities, and growth-related projects including system expansion and upgrades to accommodate new customers. Some projects may also be related to regulatory requirements. Typically, a utility will fund an amount equal to annual deprecation to fund renewals and replacements. Some utilities often consider funding renewals and replacement projects at a rate of 1.25 times or greater than the annual depreciation expense. The 1.25 factor will assist in the funding difference required when comparing the replacement cost of the asset to the depreciated value. For the Light and Power utility in 2005, the annual depreciation expense was approximately $522,000. Provided below in Table 3-1 is a summary of the capital projects for the Light and Power system. 677 Light and Power Financial Plan 3-3 1 1.A ~ Town of Estes Park 2 -7 Table 3-1 Summary of Light and Power Utility Capital Improvement Projects ($000) 2007 2008 2009 2010 2011 2012 2013 Capital Equipment Building Remodeling $12 $12 $12 $12 $12 $12 $12 Station Equipment [1] $5 $4,000 $5 $5 $5 $5 $5 Office Equipment $22 $15 $15 $15 $15 $15 $15 Data Processing Equipment $96 $45 $40 $40 $40 $40 $40 Transformers $180 $180 $180 $180 $180 $180 $180 Communication Equipment $58 $58 $58 $58 $58 $58 $58 Vehicles $276 $42 $218 $51 $25 $44 $42 Street Lights: New Dev Only $20 $20 $20 $20 $20 $20 $20 Poles, Towers and Fixtures $20 $15 $20 $20 $20 $20 $20 Overhead Lights Cond./System Upgrade Pgm $50 $50 $50 $50 $50 $50 $50 Service Extensions/Sm. Projects 50 50 50 50 50 50 50 Old Ranger Rd to Fish Hatch. 0 0 0 0 0 0 500 Allenspark 3 Ph. Tree Cable Phl/Ph2 0 0 0 650 600 0 0 From GOS 21 to Cliff Road 0 0 0 0 0 130 0 Total Overhead Lights $100 $100 $100 $750 $700 $230 $600 Underground Conductors Service Extensions $50 $20 $50 $50 $50 $50 $50 Misc. U/G and Small Projects 130 30 84 50 50 50 50 Fiber Optics Misc. Laterals 20 20 20 20 20 20 20 Dist System Improvements 0 2,000 0 0 0 0 0 Park River Wto Elm U/G 0 0 0 0 0 0 220 Good Sam to top of Switchbacks 150 0 200 0 0 0 0 Top Switchbacks/Glen Haven 3Ph 0 0 0 0 0 545 0 Engineering for Capital Projects 70 414 71 24 24 133 68 Total U/G Conductors $420 $2,484 $425 $144 $144 $798 $408 Balance to Reserves $0 $54 $0 $0 $0 $0 $0 Total Capital Equipment $1,209 $7,025 $1,092 $1,295 $1,219 $1,421 $1,400 Less: Non-Rate Funding Sources Reserves $209 $0 $12 $160 $29 $176 $too New Bonds 0 6,000 0 0 0 0 0 Total Non-Rate Funding Sources $209 $6,000 $12 $160 $29 $176 $100 Capital Funded Through Rates $1,000 $1,025 $1,080 $1,135 $1,190 $1,245 $1,300 [1] - Includes the Mary's Lake Substation Upgrade The financial analysis conducted for this plan incorporated the capital projects outlined in Town's 2006 budget and projects identified in the Town's Light and Power CIP. A complete and detailed plan with specific projects is available in Appendix B of this report. The Town has reserve funding available, which has helped to fund planned and unanticipated capital improvements in the past. It is anticipated that the Town will continue to use reserve Light and Power Financial Plan 3-4 F 07 Town of Estes Park A- J 00 funding for projects, as available and will continue to maintain reserve balances through the test period. Reserve funds are discussed later in this section. The capital analysis assumes that any additional funding beyond what is necessary to meet the annual capital requirements will be placed into the capital reserve for future capital needs. 3.3 External Sources of Funds for Capital Projects The Town can to apply for grant and loan funds available to public entities for power transmission and distribution projects. Below is a summary of various funding options available to the Town. These sources may provide full funding of a construction project. The Town would need to supplement most of these funds with additional funds either to meet eligibility criteria or to ensure that implementation of the recommended capital improvement projects can occur. Rural Utilities Service (RUS) Municipal Loans These loans are available to cover distribution, sub-transmission and headquarter facilities and may be made to retail providers for all facilities and power supply providers for sub-transmission and headquarter facilities. The interest rate for a Municipal Loan is established quarterly by the Rural Utilities Service and is based on interest rates available in the municipal bond market for similar maturities. Supplemental financing is required for this loan, generally 30%. The term of the loan is not to exceed the useful life of the facilities with a maximum of 35 years. RUS Treasury Loans These loans are available to cover distribution, sub-transmission and headquarter facilities and may be made to retail providers for all facilities and power supply providers for sub- transmission, headquarter and renewable generation facilities. The interest rate for a Treasury Loan is established daily by the United States Treasury. Supplemental financing is not required for this loan. The term of the loan is not to exceed the useful life of the facilities with a maximum of 35 years. RUS Federal Financing Bank (FFB) Guaranteed Loans These loans are available to cover distribution, transmission and headquarter facilities and may be made to retail and power suppliers. The interest rate for an FFB Guaranteed Loan is established daily by the United States Treasury with 1/8 of one percent added to that identified interest rate. Supplemental financing is not required for this loan. The term of the loan is not to exceed the useful life of the facilities with a maximum of 35 years. Other Financing Options There are other financing options available through the National Rural Utilities Cooperative Finance Corporation (CFC). These include: â€¢ Lines of Credit: This is an available source of cash to sustain a utility through interim emergency construction or other short-term needs. â€¢ Long-Term Concurrent Financing: This financing option is to supplement the Rural Utilities Service loans described above. F 07 Town of Estes Park Light and Power Financial Plan 3-5 , â€¢ Associate Member Financing: This program supports electric cooperatives' efforts to improve the quality of life in their communities and allows CFC to lend to not-for-profit cooperative organizations that are owned, operated, or controlled by CFC distribution, G&T, statewide, or regional owners and who are providing non-electric services for the benefit of their customers. The non-electric services may include satellite TV, diversified energy products, water and/or wastewater, business development and other ventures. â€¢ Rural Utilities Service Guaranteed Loans: These loan guarantees are available to distribution systems. All CFC owners are eligible to borrow funds for electric facilities, with the Rural Utilities Service repayment guarantee helping to keep interest rates low. The CFC offers various interest rate options on the financing programs mentioned above including: fixed interest rates, repricing options, variable interest rates, or interest rate conversion options. 3.4 Summary of the Light and Power Utility Financial Projections Given the above stated revenues and expenses, a summary of the financial plan and resulting financial status of the Light and Power system can be provided, as presented in Table 3-2. This is an abbreviated summary of the detailed financial plan and analysis, which is provided in Appendix B of the Technical Appendices. FOW Town of Estes Park Light and Power Financial Plan 3-6 340 Table 3-2 Summary of Light and Power Projected Revenues and Expenses ($000) 2007 2008 2009 2010 2011 2012 2013 Revenues Charges for Service $10,209 $10,413 $10,621 $10,833 $11,050 $11,271 $11,497 Miscellaneous Revenue 532 535 549 561 574 587 600 Total Revenues $10,740 $10,948 $11,170 $11,395 $11,624 $11,858 $12,097 Expenses Operation & Maintenance Power Supply $4,785 $4,990 $5,089 $5,191 $5,425 $5,669 $5,924 Distribution 1,580 1,629 1,681 1,734 1,790 1,848 1,907 Customer Accounts 679 689 712 735 759 784 810 Administrative/General 1,118 1,168 1,198 1,229 1,260 1,293 1,327 Total O&M 8,162 8,476 8,679 8,889 9,234 9,594 9,968 Taxes & Transfers Transfers $975 $995 $1,014 $1,034 $1,054 $1,075 $1,095 Taxes 147 150 153 156 159 162 165 Total Taxes & Transfers $1,122 $1,145 $1,167 $1,190 $1,213 $1,236 $1,260 Capital Funded From Rates $1,000 $1,025 $1,080 $1,135 $1,190 $1,245 $1,300 Debt Service $301 $783 $782 $786 $784 $786 $787 Change In Working Cap $0 $0 $0 $0 $0 $300 $400 Revenue Requirement $10,585 $11,428 $11,708 $11,999 $12,421 $13,161 $13,716 Balance/(Defic.) of Funds $155 ($480) ($538) ($605) ($796) ($1,303) ($1,619) Bal/(Defic.) as % of Rates -1.5% 4.6% 5.1% 5.6% 7.2% 10.2% 11.9% Proposed Rate Adjustments 0.0 % 2.5% 2.5 % 2.59 2.5 % 2.5% 2.5% Addt' 1 Rev from Rate Iner. $0 $260 $538 $833 $1,147 $1,481 $1,836 Plus: Addt'l Taxesmr 0 31 65 100 138 178 221 Bal./Def of Funds After Adj. $155 ($251) ($65) $128 $213 $93 ($4) Addt'l Rate Adjust Needed -1.5% 2.3% 0.6% -1.1% -1.7% 0.0% 0.0 % Debt Service Coverage w/ Adj. 4.84 2.03 2.38 2.73 2.97 3.19 3.44 When interpreting the results of Table 3-2 it is important to understand that the "Balance/Deficiency As % of Rates" is cumulative. That is, any rate adjustments made in previous years will reduce what is required in the following years. It is also important to keep in mind that the model assumes expenses are completely expended within each year. Typically, utilities receive additional revenue and sometimes actual expenditures do not equal 100 percent of budget appropriations. Similar to the water utility, Table 3-2 shows that rate adjustments are needed in 2008, when the proposed substation project is scheduled for construction. It is assumed that the rate adjustments for the Light and Power system will be 2.5% per year. It is important to note that the financial plan presented in this section is predicated upon an assumed level of growth on the system (2% per year) and assumptions related to cost escalation and inflation. Should growth increase, slow down, or not occur, the level of rate adj ustment required will be affected. Likewise, if costs escalate faster or slower than indicated in this plan, the rate adjustments needed would also be affected. I.77 Light and Power Financial Plan 3-7 1 1-Â£ . Town of Estes Park 3.5 Reserve Levels Financial health and viability of a utility can be determined by reserve levels. Maintaining adequate reserve levels is important for stable fiscal management. A discussion of the utility's reserves is provided below. Industry standards (from the American Public Power Association - APPA) recommend various reserves for electric utilities. This is important to financial stability. Maintaining an operating reserve at a level adequate to handle unexpected occurrences, including unexpected cash fiow fluctuations is key. A balance for an 0&M (operating) reserve is recommended to be a minimum of 90 days of operations and tax expenses, which complies with the Town's policy and bond covenants. This equates to a balance of $2.0 million in 2007 and increasing to $2.5 million by 2013. The Town begins the test period in 2007 with a reserve balance of $2.7 million. The reserve fund decreases throughout the time period due to utilization of reserve funds on capital projects. Some electric utilities also maintain a purchased power (rate stabilization) reserve. Because Light and Power's purchase power cost is included within the O&M costs, there are 90 days of reserve to cover purchased power cost fiuctuations, to some degree. Sound financial policies indicate that a fund balance equal to an average year's worth of capital projects is a healthy reserve amount to have for a capital reserve. This minimum target would require approximately $1.4 million as a balance. This minimum balance provides cash for the fluctuations that occur year to year in any utility capital improvement program. The Town practices and bond covenants dictate maintenance of two percent of the assets in the capital reserve fund as a target, which requires a minimum reserve level of $220,000. There is no capital reserve separated out at the beginning of the test period, though there's adequate revenue to fund two percent of assets during the review period. The Town should constantly monitor this reserve, and as funds exceed capital expenditures, try to build this reserve up above the 2% of asset target, and move toward the $1 million target minimum balance for more secure financial stability in future years. A summary of the projected reserve levels is provided in Table 3-3. Table 3-3 Summary of Projected Reserve Levels ($000) 2007 2008 2009 2010 2011 2012 2013 Open & Maint. Fund Beginning Balance $2,732 $2,701 $2,492 $2,492 $2,480 $2,321 $2,442 Transfer In 0 0 0 0 0 300 0 Use of Funds 31 209 0 12 160 29 176 Ending Balance $2,701 $2,492 $2,492 $2,480 $2,321 $2,442 $2,416 Minimum 90 Days O&M $2,041 $2,119 $2,170 $2,222 $2,308 $2,398 $2,492 An additional $400,000 is added in 2013, through the "Change in Working Capital" to begin to formally fund the capital reserve. This is an abbreviated summary of the detailed financial plan and analysis, which is provided in Technical Appendix B. Light and Power Financial Plan 3-8 ~~ Town of Estes Park 3./2 This review of reserve levels for light and power indicated that the utility has adequate reserve levels. However, continual monitoring of the Light and Power utility reserve levels, and increasing reserve balances, whenever revenues exceed expenses, will increase financial stability over time. 3.6 Review of the Light and Power Rates There are various "generally accepted" electric rate structures that are used to establish rates. The initial starting point in considering a rate structure is the relationship between fixed costs and variable costs. Fixed costs are generally collected as a fixed charge on a monthly basis (e.g. $5.00 per month/customer). This charge may be called by various names (e.g. customer charge, base charge, etc.) but in all cases, it is intended to collect those fixed costs that the utility incurs. There are also variable charges, on a cost per unit basis, for the demand and energy use a customer places on the system. The Town has three major types of customers within the rate schedule, residential, commercial and governmental. There are approximately four rate schedules for each customer class. For residential customers there are options for a regular basic rate schedule, a demand schedule, which seasonally has a higher energy charge in summer, and two time of day (TOD) rate schedules. The basic energy TOD schedule provides a higher energy charge for the off-peak time of day charge. The commercial customer class has a similar schedule of rates as those described for residential, though the customer and demand charges are greater, the larger the customer. Similarly, the municipal/government rates reflect the larger impact of the larger customers with higher customer and demand charges than those for residential. The Rocky Mountain National Park rates are more similarly structured to the commercial rate schedule, with lower energy charges. For purposes of this overview, the rates in effect as of January 2006 are presented in Table 3-4 along with the proposed rates, based on the 2.5% increase per year. For purposes of ease in reading, only the residential and commercial rates are provided. All rates are listed in the technical appendix. lin Light and Power Financial Plan 3-9 A Town of Estes Park 3-13 Table 3-4 Overview of the Town's 2007 and Proposed Light and Power Rates 2006 2007 2008 2009 2010 2011 2012 2013 Residential Customer charge per month $4.30 $4.42 $4.53 $4.64 $4.76 $4.88 $5.00 $5.12 Energy charge per kWh $0.08447 $0.08683 $0.08901 $0.09123 $0.09351 $0.09858 $0.09825 $0.10070 Residential Demand Customer charge per month $5.38 $5.53 $5.67 $5.78 $5.87 $5.99 $6.11 $6.23 Demand chrg per kW (9/1-4/30) $8.92 $9.17 $9.40 $9.59 $9.78 $9.97 $10.17 $10.38 Energy chrg per kWh (9/1-4/30) $0.04609 $0.04738 $0.04857 $0.04978 $0.05102 $0.05230 $0.05361 $0.05495 Energy chrg per kWh (5/1-8/31) $0.08447 $0.08684 $0.08901 $0.09123 $0.09351 $0.09585 $0.09825 $0.10070 Residential Energy TOD Customer charge per month $5.38 $5.53 $5.67 $5.81 $5.96 $6.10 $6.26 $6.41 Energy chrg per kWh (9/1-4/30) On-Peak $0.10334 $0.10623 $0.10889 $0.11161 $0.11440 $0.11726 $0.12019 $0.12320 Off Peak $0.04237 $0.04355 $0.04356 $0.04576 $0.04691 $0.04808 $0.04928 $0.05051 Residential Basic Energy TOD Customer charge per month $5.38 $5.53 $5.67 $5.75 $5.87 $5.99 $6.11 $6.23 Energy chrg per kWh (9/1-4/30) On-Peak $0.10135 $0.10419 $0.10679 $0.10946 $0.11220 $0.11500 $0.11788 $0.12083 Off Peak $0.08025 $0.08250 $0.08456 $0.08667 $0.08884 $0.09016 $0.09334 $0.09567 Energy chrg per kWh (5/1-8/31) $0.08447 $0.08684 $0.08901 $0.09123 $0.09351 $0.09585 $0.09825 $0.10070 Small Commercial Customer charge per month $7.80 $8.02 $8.22 $8.42 $8.63 $8.85 $9.07 $9.30 Energy charge per kWh $0.08459 $0.08696 $0.08913 $0.09136 $0.09364 $0.09599 $0.09839 $0.10085 Small Comm. Energy TOD Customer charge per month $8.88 $9.13 $9.36 $9.59 $9.83 $10.08 $10.33 $10.59 Energy Charge per kWh On-Peak $0.10574 $0.10870 $0.11142 $0.11420 $0.11706 $0.11999 $0.12298 $0.12606 Off Peak $0.04335 $0.04456 $0.04568 $0.04682 $0.04799 $0.04919 $0.05042 $0.05168 Large Commercial Customer charge per month $10.76 $11.06 $11.34 $11.62 $11.91 $12.21 $12.51 $12.83 Demand charge per kW $10.04 $10.32 $10.58 $10.84 $11.11 $11.39 $11.68 $11.97 Energy charge per kWh $0.03633 $0.03735 $0.03828 $0.03924 $0.04022 $0.04122 $0.04225 $0.04331 Large Commercial TOD Customer charge per month $12.91 $13.27 $13.60 $13.94 $14.29 $14.65 $15.02 $15.39 Demand charge per kW $11.65 $11.98 $12.28 $12.58 $12.90 $13.22 $13.55 $13.89 Energy charge per kWh On-Peak $0.03851 $0.03959 $0.04058 $0.04159 $0.04263 $0.04370 $0.04479 $0.04591 Off Peak $0.03181 $0.03270 $0.03352 $0.03436 $0.03522 $0.03610 $0.03700 $0.03792 Municipal Energy charge per kWh $0.07929 $0.08151 $0.08355 $0.08564 $0.08778 $0.08997 $0.09222 $0.09453 Outdoor Areas Lighting Per Fixture $9.14 $9.40 $9.63 $9.87 $10.12 $10.37 $10.63 $10.90 There are some additional charges for the Rocky Mountain National Park, with similar small, medium, and large size customer schedules. These can be found in Appendix B. Light and Power Financial Plan 3-10 ~~ Town of Estes Park 3-Ill The conceptual rate review undertaken indicates that the Town' s Light and Power rates are - contemporary and attempt to capture the cost differential to serve customers with varying usage characteristics and demand requirements. This is particularly true should the Town's power supply costs change over time, particularly in the relationship between demand and energy related charges. A comprehensive rate study would assist the Town identify if any cost or rate structure changes are warranted based on the manner in which costs are incurred and to meet the Town's goals and objectives. 3.7 Overview of Future Light and Power Rates Based upon the results of the financial analysis, the Town will require adjustments in rates in future years to meet the on-going needs of the light and power utility system. The Town may wish to conduct a review of its Light and Power system again in 2010, once the major substation project is completed and operational. Then future year adjustments can be fine-tuned to actual construction costs, financing and operations. Further, a comprehensive rate study would provide possible changes to the current rate structure and schedules. 3.8 Summary The financial plan results presented in this section indicate that Light and Power rates for the seven-year projected time horizon of 2007 to 2013 will be slightly deficient in funding the projected 0&M, capital, and debt service requirements. With the implementation of the proposed rate adjustments adequate funds will be available for the utility' s needs. In the past, the Town has been proactive in its financial management of this utility. It has demonstrated its commitment to responsible management of the utility by funding adequate levels of operations and capital infrastructure. Further adjustments can enhance the stability by providing for additional reserve balances. Continued fiscal management will enable the utility to continue to operate on a financially sound basis. 1.Ilr~ Light and Power Financial Plan 3-11 11-LI Town of Estes Park 3,6 Town of Estes Park, Colorado Does not reflect rate adjustments from PRPA Proposed Electric Rates 2008 - 2010 created 8.09.07 Custom Off-Peak Winter er Energy Energy Demand Average Average Charge Charge Charge Charge Monthly Mo. Bill YEAR CUSTOMER RATE CLASS $/Month $/kWh $/kWh $/kW Bill Increase Residential Available to all residential customers and residential with electric heat up 2007 to 25,000 kWh annually $4.36 $0.08626 $47.49 4.0% 2008 Same $4.47 $0.08842 $48.68 2.5% 2009 Same $4.58 $0.09063 $49.89 2.5% 2010 Same $4.70 $0.09289 $51.14 2.5% Residential Demand 2007 $5.45 $0.04731 $9.13 Available to all residential customers over 15,000 kWh annually and residential with electric heat (September through April) 154.53 4.6% 2008 Same $5.59 $0.0485 $9.36 158.39 2.5% 2009 Same $5.73 $0.0497 $9.59 162.35 2.5% 2010 Same $5.87 $0.0509 $9.83 166.41 2.5% Residential Energv Time-of-Dav 2007 $5.45 $0.10581 $0.04380 Available to all residential customers using energy storage electric space heat (September through April) $113.81 5.5% 2008 Same $5.59 $0.10846 $0.04490 $116.66 2.5% 2009 Same $5.73 $0.11117 $0.04602 $119.57 2.5% 2010 Same $5.87 $0.11395 $0.04717 $122.56 2.5% Residential Enerqv Basic Time-of-Dav 2007 $5.45 $0.10350 $0.08195 Available to all residential customers (September through April) $77.69 4.2% 2008 Same $5.59 $0.10609 $0.08400 $79.63 2.5% 2009 Same $5.73 $0.10874 $0.08610 $81.62 2.5% 2010 Same $5.87 $0.11146 $0.08825 $83.66 2.5% Small Commercial 2007 Available to all commercial $7.91 $0.08574 customers with demands of 35 kW or less $125.55 2008 Same $8.11 $0.08788 $128.68 2009 Same $8.31 $0.09008 $131.90 2.5% 2010 Same $8.52 $0.09233 $135.20 Small Commercial Enerqv Time-of-Dav 2007 Available to all commercial $9.00 $0.10724 $0.04438 $100.54 customers using energy storage electric space heat with demands of 35 kW or less (September through April) 3.7% 2008 Same $9.23 $0.10992 $0.04549 $103.05 2.5% 2009 Same $9.46 $0.11267 $0.04663 $105.63 2.5% 2010 Same $9.69 $0.11549 $0.04779 $108.27 2.5% 3-/ G Proposed Electric Rates 2008 - 2010 created 8.09.07 Custom Off-Peak Winter er Energy Energy Demand Average Average Charge Charge Charge Charge Monthly Mo. Bill YEAR CUSTOMER RATE CLASS $/Month $/kWh $/kWh $/kW Bill Increase Larcle Commercial 2007 $0.03648 $10.06 Available to commercial customers with demands exceeding 35 kW $10.91 $2,012.38 0.70/ 0 2008 $11.18 $0.03739 $10.31 $2,062.69 2.5% 2009 $11.46 $0.03833 $10.57 $2,114.26 2.5% 2010 $11.75 $0.03928 $10.83 $2,167.11 2.5% Large Commercial Time-of-Dav 2007 $0.03880 $0.03205 $11.71 Available to commercial customers with demands exceeding 35 kW $13.08 $572.13 1.4% 2008 Same $13.41 $0.03977 $0.03285 $12.00 $586.43 2.5% 2009 Same $13.74 $0.04076 $0.03367 $12.30 $601.09 2.5% 2010 Same $14.09 $0.04178 $0.03451 $12.61 $616.12 2.5% RMNP Administrative Housing 2007 Available to Rocky Mountain $0.04335 National Park residences which have an alternate source of power available for delivery to the Estes Park electric system $4.36 $27.98 9.0% 2008 Same $4.47 $0.04443 $28.68 2.5% 2009 Same $4.58 $0.04554 $29.40 2.5% 2010 Same $4.70 $0.04668 $30.13 2.5% RMNP Small Administrative 2007 Available to Rocky Mountain $0.04396 National Park administrative service accounts which have an alternate source of power available for delivery to the Estes Park electric system with demands of 35 kW or less $7.91 $136.32 1.3% 2008 Same $8.11 $0.04506 $139.73 2.5% 2009 Same $8.31 $0.04619 $143.22 2.5% 2010 Same $8.52 $0.04734 $146.80 2.5% RMNP Large Administrative 2007 Available to Rocky Mountain $0.02770 $4.98 National Park administrative service accounts which have an alternate source of power available for delivery to the Estes Park electric system with demands exceeding 35 kW $10.91 $418.86 7.1% 2008 Same $11.18 $0.02839 $5.10 $429.34 2.5% 2009 Same $11.46 $0.02910 $5.23 $440.07 2.5% 2010 Same $11.75 $0.02983 $5.36 $451.07 2.5% 317 Proposed Electric Rates 2008 - 2010 created 8.09.07 Custom Off-Peak Winter er Energy Energy Demand Average Average Charge Charge Charge Charge Monthly Mo. Bill YEAR CUSTOMER RATE CLASS $/Month $/kWh $/kWh $/kW Bill Increase Municipal Rate 2007 Available for municipal street, park $0.08039 lighting, and buildings $309.42 -3.5% 2008 Same $0.08240 $317.16 2.5% 2009 Same $0.08446 $325.09 2.5% 2010 Same $0.08657 $333.21 2.5% Outdoor Area Lighting 2007 Available for lighting outdoor private 1 $9.46 $9.46 6.9% 2008 Same $9.70 $9.70 2.59 0 2009 Same $9.94 $9.94 2.59/ 0 2010 Same $10.19 $10.19 2.5Â°/ 0 Wind Enerqv Surcharae 2007 Available to all residential and commercial customers (PRPA wind surcharge plus $0.001/kWh) $0.01200 2008 Same $0.01200 2009 Same $0.02500 2010 Same $0.02500 Notes 1) The energy charge for the Residential Energy Time-of-Day rates will revert to the standard Residential rate during summer season. The energy charge for the Small Commercial Energy Time-of-Day rates will revert to the standard Small Commercial rate during summer season. 2) Optional (at Town's discretion) kVA demand charge introduced for Large Commercial demand rates. 3) Residential Demand rate will only be available to existing customers on that rate. 3-18 TOWN of ESTES PARK 1.lÂ® ESTES PARK Utilities Department COLORADO INTER-OFFICE MEMORANDUM DATE: August 8,2007 TO: Utilities Committee FROM: Bob Goehring SUBJECT: Section 2 Water Utility Financial Plan: Financial Plans for the Water, Light and Power Utilities, and the General and Community Reinvestment Funds, HDR Engineering, March 2007 Background: In January of 2007, HDR Engineering presented a Water Department Financial Plan to the Utilities Committee for review. HDR incorporated committee comments from this meeting and completed this financial plan in March of 2007. The Financial plan recommends Water rate adjustments of + 5.6% for each consecutive year from 2008 to 2013. These adjustments reflect a cumulative increase of 38.67% by 2013. These rate adjustments are necessary in order to fund Phase One of the Mary's Lake Water Plant Expansion / Treatment Upgrade. This increases our plant capacity from 2 million gallons per day (MGD) to 4 MGD to meet our increasing demand. We will also change the treatment type from conventional to membrane technology. This upgrade will ensure that we can meet upcoming State Health Department and EPA regulations The proposed rate adjustments will allow the Water Department to implement the Mary's Lake Water Plant expansion / treatment upgrades mentioned above and still have a healthy fund balance of $1,259,000 in 2013. The Overview of the Financial Planning Process is attached (Attachment 1), along with the section of the plan detailing the Development of the Water Utility Financial Plan (Attachment 2) Cost / Budget: 2008 503-7000-580-32-22 Mary's Lake Water Plant expansion / treatment upgrade $ 4,741337 Action: Staff requests acceptance of the Water Utility Financial Plan by HDR Engineering, March 2007, and recommends increasing the water rates by a 5.6% each year 2008, 2009 and 2010. The Water Utility Financial Plan will update in 2010; we will then recalculate any additional rate ncreases. BG/Imvbs Attachments 1-1 0 .Â» Section 1 Overview of Financial Planning Process 1.1 Introduction HDR Engineering (HDR) was retained by the Town of Estes Park (Town) to complete financial plans for the water utility, light and power utility, and the general and community reinvestment fund. The purpose of these studies was to determine the relative financial/rate impacts to the Town and to provide the basis for adjustments to meet operating and capital needs of the Town. , In developing and establishing financial plans, there are "In developing and "generally accepted" principles or guidelines around which a establishing utility rates, there are "generally financial plan should be completed. This section of the report provides a general overview of the methodology and guidelines accepted" principles or used for the financial plan completion for each of the funds. guidelines around which This should give the reader a better understanding of the financial plans should general process that is detailed later in this report. be completed." j - 1.2 Method of Accumulating Costs The convention used by most public entities to establish their revenue requirements is called the cash-basis approach. As the name implies, a public utility aggregates its cash expenditures for a period of time to determine its required revenues from user rates and other forms of income. This methodology conforms nicely to most public agency budgetary requirements, and is a straightforward and easily understood calculation. Operation and maintenance (0&M) expenses are added to any applicable taxes or transfer payments to determine total operating expenses. Capital costs are calculated by adding debt service payments (principal and interest) to capital improvements financed with operating rate (or tax) revenues. , Depreciation expense is sometimes included in lieu of this latter item to stabilize annual revenue requirements. Under the cash basis of accounting, the sum of the capital and operating expense equals the utility' s revenue requirement during any period of time. It should be noted that the two portions of the capital expense component (debt service and capital improvements funded from rates) are necessary under the cash basis approach because utilities and other entities generally cannot finance all of their capital facilities with long-term debt. Table 1-1 summarizes the cash basis methodology. Table 1-1 Overview of the Cash Basis Methodology + 0&M Expense + Taxes or Transfer Payments + Capital Additions Financed with Rate Revenues (2 Depreciation Exp.) + Debt Service (P+I) = Total Revenue Requirements I.=Inr' Overview of Financial Planning Process 1-1 11-Zi Town of Estes Park 1-z 1.3 Prudent Financial Guidelines There are three key financial indicators that should be considered in the development of any utility financial plan, or revenue requirement. These three indicators are: capital projects funded from rates, debt service coverage ratio, and reserve levels. The following discussion provides a brief overview of each of these financial planning guidelines. Capital Projects Funded From Rates - Prudent financial planning dictates that a utility should fund a certain portion of capital improvement projects from rates on an on-going basis. The same is the case for general funds; a certain minimum portion should "...an increased be funded by taxes. The general financial guideline used is that at a minimum, a utility should fund an amount equal to or greater than level of capital annual depreciation expense. However, there are three reasons for funding from rates increasing the level of capital funding through rates. The first is that, will strengthen the funding levels over and above depreciation expense better reflect utilities' debt service actual replacement cost of facilities. Second, increasing the level of coverage ratio." capital funding will help provide cash flow to fund the capital plan in â€¢ future years, and minimize future long-term borrowing needs. Third, an increased level of capital funding from rates will strengthen the utilities' debt service coverage ratio. Debt Service Coverage Ratio - The debt service coverage ratio is an important financial measure that is reviewed by bond rating agencies and banks to evaluate an entity' s ability to make debt payments. This ratio is calculated by subtracting total O&M and taxes from total revenues. The resulting figure is then divided by the amount of annual revenue bond debt service payments to determine the utility's debt service coverage ratio. Typically, most bond covenants require at least a minimum debt service coverage ratio of 1.25. A strong debt service coverage ratio may provide the benefit of a higher bond rating and potentially lower interest costs (i.e. lower risk equates to lower interest rates). Currently, the Town strives to maintain a debt service coverage ratio above 1.25. Reserve Levels - Reserve levels are a crucial part of a utility' s financial picture. Typically utilities maintain several different types of reserve funds. These may include: an operating reserve, a capital reserve, an emergency or contingency reserve, and a rate stabilization reserve. Each of these reserves has its own financial, operating or legal requirements which may set an established minimum reserve level (e.g. a bond reserve). A key aspect of reviewing reserve levels was determining target minimum levels for the Town' s current reserves. It is important to remember that when reserves fall below the targeted minimum level, management should review the cause of the declining reserves and determine what action, if any, should be taken. Maintenance of minimum reserve levels should not, on its own, trigger the need for a rate adjustment. However, after two consecutive years of diminishing reserves as a result of not fully covering costs, rates should be reviewed. In the Town' s bond covenants it is stated that a 90-day operating reserve should be maintained. This parameter was also applied to the general fund, as a minimum level to maintain for the operating reserve. However, most general funds maintain a large fund balance due to the myriad of unexpected issues this fund must be able t6 respond to. Some entities also maintain a separate "rainy day" fund. The bond issues also require that a balance of two percent (2%) of the total Overview of Financial Planning Process 1-2 F 07 Town of Estes Park assets should be maintained as a capital reserve. Reserve levels for each fund are addressed within the next section of the report. 1.4 Summary This section of the report has provided a brief introduction to the general principles and techniques used to develop and complete financial plans. These principles and techniques were the basis for the financial plans and the foundation used to meet the Town's key objectives in establishing their water, light and power, general fund and community reinvestment financial plans. 677 Overview of Financial Planning Process 1-3 1.1-4 ~ Town of Estes Park Section 2 Development of the Water Utility Financial Plan 2.1 Introduction The effective operation of the water utility and implementation of the Water Treatment Evaluation Report is dependent upon developing a feasible financial plan which can be financially supported by the utility, will meet State and local regulatory requirements, and provides the fiexibility to deal with unforeseen changes. This section presents a financial plan that reviews the revenues and expenses for the Town's water system. The financial plan includes projected operating and capital costs of the system for the seven-year time horizon of 2007-2013. The revenues and expenses used in the financial plan were obtained from the Town's 2006, 2007 and 2008 budgets in conjunction with historical information. The capital costs contained within the financial plan were based on the 2006 Water Treatment Evaluation Report. Future years' operating costs were based on 2008 levels escalated out through time. The results of the financial plan outline the annual operating and capital needs of the Town' s water system and determine if the current water rate revenues are sufficient to cover costs. This analysis is not sufficient to provide a detailed review of alternative rate designs. However, the Town may consider performing a more comprehensive rate study independent of this planning document to address any rate structure related issues. 2.2 Development of the Financial Plan (Revenue Requirement) A financial plan was developed to determine the Town's ability to meet its water utility capital improvement and operating needs over the seven-year review period. The financial plan was developed to review the projected revenues and expenses of the water system for 2007-2013. By assessing the total expenses needed to cover 0&M and capital improvements, a revenue requirement is determined. This is generally the first step in an overall comprehensive rate study, determining the adequacy of the level of rates. In developing the financial plan, fund balance and reserve levels were also analyzed. The Town's 2008 budget was used as a base for future years. Future years' costs were escalated by applying factors for inflation and growth, as described below. 2.2.1 Projection of Water Revenues The first component of the financial plan is a review of the sources of funds or revenues of the water system. The different revenues received from operations are: I Rate revenues - water sales to customers; I Other revenues - ancillary fees; I Interest Revenue -interest earnings on fund balance; and A Tax Levy 1-~7 Development of the Water Utility Financial Plan 2-1 1 11_/- ~ Town of Estes Park Rate revenues for 2006,2007 and 2008 were provided by the Town. Projections for future year revenues were developed by applying a conservative projected growth rate of one percent to the 2008 budgeted rate revenue. The one percent growth level was used to reflect the experience the Town has had in the impacts of reduced water usage as a result of conservation, while at the same time growing with new customers. Other miscellaneous revenues, including investment interest, fees and other revenue, are projected to increase approximately three percent per year through 2013. Rate revenues were projected to be $2.0 million in 2006. With growth applied at one percent per year, the rate revenue increases to $2.4 million by 2013. Other miscellaneous revenues for 2006 total approximately $185,000, which increases over the seven years, reaching $334,000 by 2013. The total revenue available to offset the operating and capital requirements of the water system total $2.4 million in 2007 increasing to $2.7 million by 2013. 2.2.2 Projection of Water Expenses The second part of the financial plan was a review of the applications of funds or expenses for the water utility. In developing the financial forecast, four main cost components were reviewed: â€¢ Operation and Maintenance (0&M) Expenses â€¢ Taxes â€¢ Debt Service â€¢ Capital Improvements Funded From Rates The projection of operating expenses for 2006, 2007 and 2008 was based on budget documents provided by the Town. Future expenses were based on the 2008 budget. These expenses are then projected for future years by applying escalation factors dependent upon the type of expense being reviewed. OPERATIONANDMAINTENANCEEXPENSES Using the 2008 budget numbers as a starting point, expenses were escalated by factors representing assumed inflationary rates to obtain projected costs. Escalation factors ranged from two to eight percent. Labor was escalated at two percent and purchased water was escalated at three percent. Due to recent significant increases in health insurance, employee benefits were escalated at an average annual increase of eight percent. It should be noted that no other program cost increases, above budget year 2006 figures, were assumed as part of the projected costs. O&M expenses ranged from $2.0 million in 2006, and with assumed inflationary trends, to $2.6 million in 2013. TAXES The water system currently has general fund transfer obligations in the form of payments in-lieu of taxes. This transfer is calculated as 2.5 percent of the inside water utility rate revenues. There is also a general fund transfer of four percent of sales, except bulk sales, and a vehicle replacement transfer. For 2006, these transfers total approximately $420,000 and change to $380,000 by 2013. T r)7 Development of the Water Utility Financial Plan 2-2 I-lAI Town of Estes Park 1 - (Q DEBT SERVICE For purposes of financial planning, debt service includes both principal and interest payments on any outstanding debt obligations. The debt service on the existing debt averaged approximately $305,000 per year through 2007. The maturity date for the 1990A bonds is 2010 and the 1997B bonds is 2011. Based upon the need for new long-term debt to financial capital projects, new debt payments of $180,000 begin in 2008. This amount doubles in 2009 through 2011. In 2012, another new bond issue is assumed, doubling the total debt service, to $633,000 in 2012 and 2013. Meeting debt service coverage requirements is an important financial indicator for well managed utilities. Debt service coverage is a financial measurement of an entity' s ability to repay debt. A debt service coverage ratio is a "If the proposed rate ~ comparison of net income before debt service payments to the adjustments are total debt service on revenue bonds. A sound financial approved, the lowest minimum target for the Town to meet is a 1.25 coverage ratio coverage ratio predicted test. Rating agencies prefer a stronger debt service coverage for the review period ratio of 1.50 or higher. There are several years between 2009 and would be 1.76 in 2009." 4 2013 that the coverage ratio is slightly higher than 1.3, prior to ,* , any rate adjustments. If the proposed rate adjustments are approved, the lowest coverage ratio predicted for the review period would be 1.76 in 2009. The use of development fees for growth related project debt has been implemented to reduce the impacts of growth related capital expansion on existing rate payers. Development fees have been applied against growth-related debt payments to reduce the overall revenue requirements and the impacts to rate payers. The Town' s water development fee revenue averages approximately $300,000 per year, reducing to $250,000 per year in 2012 and 2013. HDR recommends using not more than 50% of the total development fee revenue toward debt. This level is recommended due to the possibility of decreasing or slowing growth. If more than 50% of fees are proposed to offset growth-related debt payments, and there is slowing growth and reduced development fees, it may create the need for an unplanned rate increase. By using 50% or less of overall projected annual development fee revenue, the utility is buffered from the variances in development trends. The use of development fees in this manner does indicate, however, that without the development fee revenue, the water utility rates would not be able to cover all debt payments and meet the bond covenants with the present rate revenue levels. CAPITAL IMPROVEMENT PROJECTS FROM RATES Capital improvement projects are related to the infrastructure of a utility. Capital improvement projects are generally divided into two categories: capital improvements related to renewal and replacements of existing plant and depreciated facilities, and growth related projects including system expansion and upgrades to accommodate new customers. Some projects may also be related to meeting regulatory requirements. Typically, a utility will fund an amount equal to annual deprecation to fund renewals and replacements. Some utilities often consider funding renewals and replacement projects at a rate at least 1.25 times the annual depreciation expense. The 1.25 factor will assist in the funding I.-I-'r) Development of the Water Utility Financial Plan 2-3 121.4 ~ Town of Estes Park I --7 difference required when comparing the replacement cost of the asset to the depreciated value. For the water utility in 2005, the annual depreciation expense was approximately $475,000. Through gradual increases in funding, this level of funding ($475,000) of capital projects from rates will be achieved in 2013. Since new improvements will be added to the system, the depreciation expense will also increase, and if the 1.25 factor was applied, this capital funding level should increase further. This important capital funding source should be reviewed and a financial/rate setting policy should be adopted by the utility to assure adequate funding levels are met. A summary of the water capital projects is provided in Table 2-1. Table 2-1 Summary of Water Utility Capital Improvement Projects ($000) 2007 2008 2009 2010 2011 2012 2013 Capital Equipment Station Equipment $5 $5 $5 $5 $5 $5 $5 Security Equipment 8 8 10 10 8 8 8 Communication Equipment 12 16 16 16 16 16 16 Purification Equipment 44 33 25 25 25 25 25 Vehicles 70 42 27 68 76 130 110 Total Capital Equipment $138 $103 $83 $124 $130 $184 $164 Waterline Sys. Priority Projects Stanley Circle 8" $0 $0 $125 $0 $0 $0 $0 Bureau Area 200 125 125 250 0 150 125 Total Priority One Projects $200 $125 $250 $250 $0 $150 $125 Priority Two Projects US 34 MacDonald's to Church $0 $0 $0 $0 $425 $0 $0 Hill Streets 0 0 150 0 0 0 0 Panorama Circle 0 0 0 0 0 216 0 Shady Lane 0 0 0 0 0 0 80 Spruce Drive / Lawn Lane 0 0 0 0 0 0 150 Total Priority Two Projects $0 $0 $150 $0 $425 $216 $230 Water System Master Plan Marys Lake WTF Exp./Addition $431 $4,741 $0 $0 $0 $0 $0 MLWTF Expansion-BT Raw Pump 0 0 0 0 467 5,136 0 FW Piping-MLWTF to 18"main 0 0 0 0 149 1,540 0 Engineering for Capital Projects 40 25 80 50 85 73 71 Balance to Reserves 0 0 0 0 0 0 0 Total Water System Master Plan $471 $4,766 $80 $50 $701 $6,749 $71 Total Capital Projects $809 $4,995 $563 $424 $1,255 $7,298 $590 Less: Non-Rate Funded Sources Operating Reserve $509 $175 $213 $0 $0 $1,300 $0 Capital Reserve 0 0 0 44 845 2,158 110 New Bonds 0 4,500 0 0 0 3,400 0 Total Non-Rate Sources of Funds $509 $4,675 $213 $44 $845 $6,858 $110 Capital Improv. Funded Thru Rates $300 $320 $350 $380 $410 $440 $480 Development of the Water Utility Financial Plan 2-4 F 07 Town of Estes Park The financial analysis conducted for this plan incorporated the capital projects outlined in Town's 2006 budget and the recently completed water treatment facility plan. The Town has reserve funding available, which has helped to fund planned and unanticipated capital improvements in the past. It was anticipated that the Town will continue to use reserve funding for projects, as available and will continue to maintain reserve balances through the test period. The capital analysis assumed that any additional funding beyond what is necessary to meet the annual capital requirements will be placed into the capital reserve for future capital needs. The status of reserve funds is discussed later in this section. 2.2.3 External Sources of Funds for Capital Projects The Town has the ability to apply for grant and loan funds available to public entities for water system projects. Table 2-2 provides a summary of the contacts for various funding agencies. These sources rarely provide full funding of a construction project. The Town would need to supplement any of these funds with matching funds to meet eligibility criteria and to dnsure that implementation of the recommended capital improvement projects can occur. Table 2-2 Funding Agency Contacts Program Address Phone Fax Internet Rural 4302 W. 0 Street Road 970.356.8097 970.351.0392 www.rurdev.usda.gov/co/ Development Greeley, CO 80634 Division of Local Government Berry Cress www.cwrpda.com 303.866.2352 1313 Sherman St, Room 521 barry. cress@state.co.us Denver, CO 80203 Water Quality Division www.cdphe.state.co. us/op/ Donna Davis Drinking Water 303.692.3562 waterqualityreg.asp Revolving Fund 4300 Cherry Creek Dr. South donna.davis@state.co.us Denver, CO 80246.1530 Colorado Water Resources and Power Development Authority 303.830.1550 Mike Brod mbrod@cwrpda.com Ext. 15 1580 Logan St, Suite 620 Denver, CO 80203 Colorado Water Colorado Water Resources and Resources & Power Development Authority 303.830.1550 www.cwnxla.com Power Mike Brod Ext. 15 mbrod@cwrpda.com Development 1580 Logan St, Suite 620 Authority Denver, CO 80203 Colorado Water Resources and DWRF Design Power Development Authority 303.830.1550 www.cwrpda.com Grant Keith McLaughlin Ext. 22 kmclaughlin@cwrâ„¢la.com 1580 Logan St, Suite 620 Denver, Colorado 80203 I.Z~'r~ Development of the Water Utility Financial Plan 2-5 1 1,~LI Town of Estes Park 1/01 Table 2-2 Funding Agency Contacts Program Address Phone Fax Internet Colorado Water Conservation 1313 Sherman St, Room 721 www.cwcb.state.co.us/ 303.866.3441 303.866.4474 Board Water Denver, CO 80203 Conservation Efficiency Grant Colorado Water Kirk Russell www.cwcb.state.co.us/ Conservation 1580 Logan St, Suite 750 303..866.3449 Finance Board Water Denver, CO 80203 Bruce Johnson Kirk.russell@state.co.us Project Loan 303.866.3428 Bruce. iohnson@state.co.us Private Activity Colorado Division of Housing Bond Elizabeth Smith www.dola.colorado.gov 303.866.5577 1313 Sherman St, Room 518 Elizabeth.smith@state.co.us Denver, CO 80203 Funding through any of these sources can potentially lower future rate adjustments, as presented later in this section. A brief description of each of these funding sources is provided below. USDA Rural Development (RD) USDA Rural Development awards grants and loans to rural communities with a population under 10,000 for construction and replacement of water, wastewater, storm sewer, and solid waste facilities. Funds may be used for construction, engineering, and interest during construction, essential equipment, site acquisition, legal fees, water rights, etc. Communities can receive a loan and grant combination, with percentages based on median incomes, health hazards elimination and annual debt service charges. Three levels of interest rates will be applied depending upon need with terms up to 40 years or the useful life of the project. Drinking Water Revolving Fund (DWRF) The Drinking Water Revolving Fund (DWRF) is a low-interest loan program which was initially created in 1995 and funded by the State and the Water Resources and Power Development Authority. In 1997, it was further capitalized with federal dollars to fund eligible projects defined by the federal Safe Drinking Water Act. Local governments (municipalities, counties, and special districts) are eligible for funding under the DWRF. The fund is jointly administered by the Colorado Division of Local Government, the Water Quality Division, and the Colorado Water Resources and Power Development Authority. Interest on the leveraged loans is 80 percent of the bond rate and direct loans at 3.75 percent for up to 20 years. Colorado Water Resources and Power Development Authority Small Water Resources Projects Program The Colorado Water Resources and Power Development Authority were created by the General Assembly to provide Colorado the ability to finance water and wastewater projects. The Authority can assist governmental entities such as cities and special districts by issuing revenue T '1 Development of the Water Utility Financial Plan 2-6 WA. Town of Estes Park 1-10 . bonds and loaning the proceeds to the governmental entity with substantial savings in costs of issuance and interest rates. Eligible projects include storage reservoirs, water and wastewater treatment plants, distribution systems, water wells and pumping stations. Construction costs include design, engineering, costs of issuance, financing reserves, interest during construction, site acquisition, planning, environmental documentations, water rights, and mitigation costs. Terms of the loan will be at market rates for up the 30 years. Drinking Water Revolving Fund/Water Pollution Control Revolving Fund Planning and/or Design Grant Planning and design grants are available to assist communities with populations under 10,000 who are considering a project on the eligibility list for either Drinking Water or the Water Pollution Control Revolving Funds program. To qualify, the municipality must have a median household income less than the most recent median household income for the State generated by the Census, or post-project water/sewer monthly rates equal to or greater than the state average as determined by the Department of Local Affairs. The municipality must be on the Drinking Water Revolving Fund eligibility list. The maximum amount for the grant is $10,000. Colorado Water Conservation Board (CWCB) Water Efficiency Grant Program The Colorado General Assembly under House Bill 05-1254, created a mechanism to provide financial assistance to covered entities and qualifying agencies who are seeking to perform or promote more meaningful water conservation, through the CWCB' s Office of Water Conservation and Drought Planning. The specific use of the grant monies are: for covered entities, the money may be used to aid in achieving water conservation goals specified in their water conservation plans; for public and private agencies, whose primary purpose is to promote the benefits of water resources conservation, the money may be used to provide education and outreach aimed at demonstrating the benefits of water efficiency. CWCB Water Conservation The Colorado General Assembly under House Bill 04-1365, created a mechanism for the CWCB to provide financial assistance to covered entities (same entities as eligible for the CWCB Water Efficiency Grant Program) in the State to develop water conservation plans that meet the provisions of Â§37-60-126 (6) C.R.S. Financial assistance is also provided for covered entities and state and local governmental agencies to develop drought mitigation plans identified as sufficient by the Office. CWCB Water Project Loan Program The Water Project Loan Program was established in 1971 to provide low interest loans for raw water resource projects. Eligible projects include the collection, storage and transmission of raw water supplies. Example projects include new or rehabilitation of reservoirs, ditches, canals, pipelines, groundwater wells, water rights purchases, and fiood control facilities. A loan feasibility study is required, which must include preliminary engineering by a professional engineer to help select the best alternative and determine project costs. Loans can be made for up to 80 percent of the project cost. Average municipal interest rates are between 3.25 and 4.25 percent for up to 30 years with a one percent loan service charge. I-Z-'r) Development of the Water Utility Financial Plan 2-7 1 1,&~ Town of Estes Park 1-/1 Private Activity Bonds (PAB) Tax-exempt private activity bond allocations are available to municipalities and counties as well as issuing authorities. These entities can in turn issue bonds or other obligations to private entities with interest exempt from federal income taxation. Privately owned water, wastewater, and certain waste disposal facilities are eligible. 2.3 Summary of the Water Utility Financial Projections Given the above stated revenues and expenses, a summary of the financial plan and resulting financial status of the water system is provided in Table 2-3. This is an abbreviated summary of the detailed financial plan and analysis, which is provided in Appendix A of the Technical Appendices. Table 2-3 Summary of Projected Water Utility Revenues and Expenses ($000) 2007 2008 2009 2010 2011 2012 2013 Sources of Funds (Revenues) Charges for Service $2,125 $2,267 $2,289 $2,312 $2,335 $2,359 $2,382 Miscellaneous Revenue 293 301 308 314 321 327 334 Total Sources of Funds $2,418 $2,568 $2,598 $2,627 $2,656 $2,686 $2,716 Uses of Funds (Expenses) Operation & Maintenance Sources of Supply $147 $147 $147 $147 $149 $152 $155 Purification 542 680 700 722 743 766 789 Operations/Maintenance 842 763 788 814 840 868 897 Customer Accounts 318 324 333 342 352 361 371 Administrative General 326 336 344 352 361 369 378 Total O&M $2,174 $2,250 $2,312 $2,376 $2,445 $2,517 $2,592 Taxes and Transfers Transfers $100 $106 $107 $108 $109 $110 $112 Taxes 35 38 38 39 39 39 40 Subsidies 0 0 0 0 0 0 0 Total Taxes & Transfers $135 $144 $145 $147 $148 $150 $151 Capital Funded Thru Rates $300 $320 $350 $380 $410 $440 $480 Net Debt Service $6 $105 $363 $357 $166 $384 $384 Net Revenue Requirement $2,615 $2,818 $3,170 $3,259 $3,170 $3,491 $3,607 Balance (Deficiency) of Funds ($197) ($250) ($572) ($633) ($514) ($805) ($891) Rate Adjustment Needed 9.3% 11.1% 25.0% 27.4% 22.0% 34.1% 37.4% Proposed Rate Adjustments 0.0 % 5.6% 5.6% 5.6% 5.6% 5.6 % 5.6 % Addt'l Rev. from Rate Adj. $0 $127 $264 $411 $569 $739 $921 Plus: Add'l Tax/Tfr. From Iner. $0 $10 $20 $31 $44 $57 $71 Bal./Defic. After Rate Adj. ($197) ($133) ($329) ($254) $12 ($123) ($40) Add'l Rate Adjust. Needed 9.3% 5.6% 12.9% 9.3% -0.4% 4.0% 1.2% Debt Service Coverage w/ Adj. 2.07 1.93 1.37 1.35 1.84 1.31 1.26 Development of the Water Utility Financial Plan 2-8 F 07 Town of Estes Park . . When interpreting the results of Table 2-3 it is important to understand that the "Rate Adjustment Needed" is cumulative. That is, any rate adjustments made in previous years would reduce what is required in the following years. It is also important to keep in mind that the model assumes expenses are completely expended within each year. Typically, utilities receive additional revenue, and often actual expenditures do not total 100 percent of budget appropriations. Therefore, there are other options the Town could consider. Those options would include adjusting capital improvement timing, use more reserves for capital improvements (but dropping below minimum balances), reducing other operating expenses, and closely monitoring additional revenue or increased growth beyond the one percent assumed. At this time, given the Water Treatment Evaluation Plan and bond covenant requirements, it appears prudent to move forward with the planned projects and projected operating needs as developed within this report by the Town and their consultants. It is also important to note that the financial plan presented in this section was predicated upon an assumed level of growth on the system (1% per year), and assumptions related to conservation and inftation. Should growth increase, slow down, or not occur, the level of rate adjustment required will be affected. Likewise, if costs escalate faster or slower than indicated in this plan, the rate adjustments needed would also be affected. 2.4 Reserve Levels A key indicator of financial health and viability is a utility's reserve levels. Maintaining adequate reserve levels is important for stable fiscal management of the utility. A discussion of the utility's reserves is provided below. Industry standards from the American Waterworks Association (AWWA) recommend that utilities maintain operating reserves at a level adequate to handle unexpected occurrences, including unexpected cash flow fluctuations. A balance for an 0&M reserve is recommended to be a minimum of 45 days of operations and tax expense. The Town has targeted a minimum reserve of 90 days of operations and tax expenses, which is equal to a balance of $540,000 in 2007 and increasing to $648,000 in 2013. The Town begins the test period in 2007 with a balance of $2.9 million. The balance decreases throughout the time period due to use for capital projects, ending with a balance of approximately $735,000. Therefore, the utility is able to meet this annual minimum reserve balance through the review period. "The review of reserve balances indicated that the For this study, a capital reserve fund was also established. Town has adequate reserve This reserve was funded by the development and water rights fees and therefore was restricted to fund just growth funding to meet unanticipated obligations and general related facilities. In 2007 this reserve was established with a operating fluctuations. Alt $500,000 balance and grows slightly over the review period reserve target minimums are to $524,000 by 2013. Sound financial policies indicate that more than adequately met." a fund balance equal to an average year' s worth of capital projects is a healthy reserve target. The Town bond , I-Z--"r' Development of the Water Utility Financial Plan 2-9 11.Zi Town of Estes Park 1-13 /%**r .f,94,~/*l/44#",94 31" covenants and practices indicate maintenance of 2% of the assets in the capital reserve fund as a minimum target. This target requires a minimum reserve level of $370,000 (for 2005 asset values). Therefore, the Town meets this financial test. A summary of the projected reserve levels is provided in Table 2-4. This is an abbreviated summary of the detailed financial plan and analysis, which is provided in the Technical Appendix. Table 2-4 Summary of Projected Reserve Levels ($000) 2007 2008 2009 2010 2011 2012 2013 Operating Reserve Beginning Balance $2,932 $2,423 $2,248 $2,035 $2,035 $2,035 $735 Use of Funds 509 175 213 0 0 1,300 0 Ending Balance $2,423 $2,248 $2,035 $2,035 $2,035 $735 $735 Min. 90 Days O&M $544 $562 $578 $594 $611 $629 $648 Capital Reserves Beginning Balance $500 $725 $1,100 $1,565 $2,002 $1,652 $56 Plant Develop. Fee 200 400 408 416 424 433 442 Water Rights 325 350 357 364 371 379 386 Used for Debt 300 375 300 300 300 250 250 Used for CIP 0 0 0 44 845 2,158 110 Ending Balance $725 $1,100 $1,565 $2 $1,652 $56 $524 Min. 2% Fixed Assets '05 $371 $371 $371 $371 $371 $371 $371 The review of reserve balances indicated that the Town has adequate reserve funding to meet unanticipated obligations and general operating fluctuations. All reserve target minimums are more than adequately met. 2.5 Review of the Existing Water Rates There are various "generally accepted" water rate structures that can be used to establish or develop rates. The initial starting point in considering a rate structure is the relationship between fixed costs and variable costs. Fixed costs are generally collected as a fixed charge on a monthly basis (e.g. $5.00 per month/meter). This charge may be called by various names (e.g. customer charge, meter charge, base charge, minimum charge, etc.) but in all cases, it is intended to collect those fixed costs that the utility incurs. Currently, the Town has four customer classes (residential, commercial, pumped flow, and bulk water) with rates depending upon urban or rural location. There is a minimum charge as well as a consumption charge. For purposes of this overview, the rates in effect as of January 2007 are presented in Table 2-5. HIt Development of the Water Utility Financial Plan 2-10 Town of Estes Park 1,11-~ Table 2-5 Overview of the Town's Current Water Rates (Adopted for 2007) Metered Rates Urban Rural Meter Charge: $/Month 3/4" x 5/8" $15.20/month $24.35/month 1" 16.70 26.75 11/2" 20.30 32.50 2" 22.80 36.50 3" 52.30 83.70 4" 73.30 117.30 Volume Charges: Per 1,000 Gallons Residential $3.20/1,000 gallons $5.12/1,000 gallons Commercial 3.12 4.99 Pumped Flow 4.48 7.17 Bulk Water 3.58 5.73 The Town' s meter charge is based on the size of the customer' s meter. This approach is often used since different meter sizes place different demands and capacity requirements on the system. It is common to base the meter charge rate differential on the AWWA safe operating capacity of the meter. The meter capacity approach is summarized in Table 2-6. Table 2-6 Example of the Meter Charges Based Upon Meter Capacity Factors Safe Maximum Meter Charges at Meter Charges at Meter Size Operating Capacity Meter Capacity Weightings Capacity Capacity GPM [1] Factors (Urban) Weightings (Rural) 3/4" 30 1.00 $15.20/mth $24.35/mth 1" 50 1.67 25.38 40.66 11/2" 100 3.33 50.62 81.09 2" 160 5.33 81.02 129.79 3" 300 10.00 152.00 243.50 4" 500 16.67 253.38 405.92 [l] AWWA C-700-77 Cold Water Meters - Displacement Type As Table 2-6 indicates, the fixed meter or base charge increases in relationship to the safe operating capacity of the various meter sizes. While the Town's meter charges begin to address this equity issue, a comparison of the meter charges in Table 2-6, with the existing charges in Table 2-5, indicates there is room for adjustment in the meter charge portion of the rates. Meter capacity is an important concept in that a customer that has a two-inch meter is regarded, from a capacity perspective, as the equivalent of 5.33 - 3/4-inch customers. Another way of saying this is the commercial customer with a two-inch meter is, from a capacity perspective, the equivalent of five (5.33) single-family homes with 3/4-inch meters. Since a large portion of costs are generally related to meeting capacity requirements, one can see the importance of taking into account capacity in establishing rates for customers. The Town could consider application of I.-I-)7 Development of the Water Utility Financial Plan 2-11 11.4 ~ Town of Estes Park 1,15 meter capacities for larger-size metered customers. The above meter ratios could be used to calculate the monthly fixed meter charge. The conceptual rate review undertaken indicates that the Town' s rates are contemporary and attempt to capture the cost differential to serve customers with varying usage characteristics and facility requirements. Completion of a comprehensive rate structure review would assist the Town identify if any rate structure changes are warranted based on the Town's goals, objectives and the manner in which costs are incurred. 2.6 Overview of Future Water Rates Based upon the results of the financial analysis, the Town will require adjustments in rates in future years to meet the on-going needs of the water utility system, in particular to fund the treatment plant to meet drinking water quality regulations, as identified within the Water Treatment Evaluation Report. The Town may wish to conduct a review of its water rates which would provide possible changes to its current rate schedules. These changes may include analysis of the meter charges, developing conservation-oriented rates, or other objectives. In any case, this analysis would provide alternative rate structures that meet the goals and objectives of the Town. 2.7 Summary The financial plan results presented in this section indicate water rates for the seven-year projected time horizon of 2007 to 2013 will adequately fund the projected O&M, capital, and debt service requirements if the recommended water rate adjustments are made. The Town has been proactive in its financial management in the past. It has demonstrated its commitment to responsible management of the utility by funding adequate levels of operations, capital and reserves. Continued prudent fiscal management will enable the water utility to continue to operate in a financially sound manner. I.I-rl Development of the Water Utility Financial Plan 2-12 1 13.I Town of Estes Park l-lb Proposed Water Rate Schedule 2008 - 2010 created 8/9/07 TO CALCULATE YOUR MONTHLY WATER BILL FOR 2007-2008: Follow the formula below using the charts for Base Fee and Volume Charge on this page Base Fee + [ (Gallons Used divided by 1,000) x Volume Charge] = Monthly Water Bill BASE FEE BY METER SIZE *Most residential meters are 3/4" METER SIZE 2007 2008 2009 2010 Inches: Urban Rural Urban Rural Urban Rural Urban Rural 5/8" $15.20 $24.35 $16.05 $25.71 $16.95 $27.15 $17.90 $28.67 314 11 * $15.20 $24.35 $16.05 $25.71 $16.95 $27.15 $17.90 $28.67 1 " $16.70 $26.75 $17.64 $28.25 $18.62 $29.83 $19.67 $31.50 1-1/2" $20.30 $32.50 $21.44 $34.32 $22.64 $36.24 $23.90 $38.27 2" $22.80 $36.50 $24.08 $38.54 $25.43 $40.70 $26.85 $42.98 3" $52.30 $83.70 $55.23 $88.39 $58.32 $93.34 $61.59 $98.56 4" $73.30 $117.30 $77.40 $123.87 $81.74 $130.81 $86.32 $138.13 VOLUME CHARGE BY RATE CLASS PER 1,000 GALLONS 2007 2008 2009 2010 HATE CLASS Urban Rural Urban Rural Urban Rural Urban Rural Hesidential $3.20 $5.12 $3.38 $5.41 $3.57 $5.71 $3.77 $6.03 Commercial $3.12 $4.99 $3.29 $5.27 $3.48 $5.56 $3.67 $5.88 Pumped Flow $4.48 $7.17 $4.73 $7.57 $5.00 $8.00 $5.28 $8.44 Bulk Water ** $3.58 $5.73 $3.78 $6.05 $3.99 $6.39 $4.22 $6.75 ** A volume charge of $2.83 per 1,000 gallons shall be assessed to existing bulk water customers in lieu of a water connection charge. Future bulk water customers shall be assessed a volume surcharge'based on the water con- nection charge in effect at the time of their connection.A bulk water customer that is also a pumped flow customer shall be charged the pumped flow rate. 1,11 Finance, Light & Power, Water Departments Memo To: Utility Committee Town Administrator Repola From: Steve McFarland, Finance Officer Date: August 16, 2007 Subject: Utility committee report Background Attached the following documents for the Committee's perusal: â€¢ Charts and graphs for/through July 2007 â€¢ Financial statements for/through July 2007. Body Light & Power The cash flow comparison page (right column) shows that revenues (60%) are exceeding the pace of the calendar (58%), and expenses in every category are at or under the calendar pace (aggregate 0&M % = 48%). Revenues per kWh are up compared to 2006 (.085 vs .083). Expenses are elevated compared to 2006 ($215,000), but are all within budgeted parameters as noted above. As noted in the July Utility Committee meeting, we have discontinued comparative analysis vs. 2006 expenses when 2007 expenses are within budgeted parameters. If you would like me to resume noting the differences between 2006 and 2007, please let me know. Charts The green/red chart is strongly positive (green), meaning that generally revenues are trending upwards. This is also reflected in the "L&P Revenue Progress" chart (note the red bar increase from June, and is now forecasted to exceed the annual budget). The new charts also reflect progress. The "Actual L&P revenues over/beyond budgef' chart shows that compared to budget (ratio of actual to budget), we are ahead of where we were at this time last year. This is portrayed in bar chart form on the next chart. Revenues vs. budget really "took off' in September last year - it will be interesting to see if that trend recurs. Water We have finally cycled through the journal entry error from 2005 and now have direct comparisons YTD between 2007 and 2006. Revenues are slightly ahead of calendar pace (65% vs 58%), largely on the strength of the non water-sales categories. Revenues per gallon have also increased over 2006. Overall expenses are quite low (47Â°/0). Customer billing is at 63% ofbudget primarily due to meter purchases ($43,000). The green/red data page has turned green again, which means that the general direction for water sales is again "up". As can be seen on the "water revenue progress" graph, projected revenues are still well in excess ofbudget. The last two graphs show that while revenues are on pace to exceed budget, they are now forecasted to do so at a slightly lesser pace than they did in 2006. Depreciation REPRINT FROM JUNE 2007 REPORT: The depreciation of our fixed assets in the utility funds is a significant factor when it comes to planning for the future. In a perfect world, one would at least want to be replacing fixed assets (or reserving funds) at a rate equal to or greater than the depreciation pace. We are not sure exactly how to incorporate this information into our cash fows, other than to simply state the information. For 2006, L&P fixed assets depreciated at a pace of $545,600, while Water fixed assets depreciated $475,325. Conclusion Both utilities look very strong financially. Action steps requested - None. â€¢ Page 2 TOWN OF ESTES PARK LIGHT AND POWER TRENDS Type Surnmary Date July-07 12 - month moving average Total % Total % of Avg Avg Avg # of accts KWH Growth Revenues Total Rev % Cum Rev/KWH KWH/Cust Rev/Cust Residential 7481 3.977,621 0.0% $367.914 43% 43% $().0927 532 $49.17 Gen Serv Small 1.617 2,093,268 -0.3% $ 1 89,694 22% 65% $0.0907 1,294 $117.30 Gen Serv Large 93 2,799,787 -0.5% $171,407 20% 85% $0.0613 30,125 $1,844.69 Residential Demand 385 722.067 0.8% $65.870 8% 93% $0.()962 1.880 $171.17 Res Energy / Time of Day 244 413.531 0.8% $26.283 3% 96% $0.0650 1.691 $107.47 Municipal 6 I 254.499 0.7% $20.037 2% 99% $(~.()788 4.2 IN $332.()6 RMNP- Small Admin 21 67.341 1.0% $3.()96 0% 99% $0.0460 3.199 $147.08 RMNP - Large Admin 6 62,517 -0.2% $2.73() 0% 99% $0.0440 10,420 $455.03 Wind Power 1()5 0 0.0% $1,780 0% 99% N/A N/A N/A Res Basic Energy 19 24.580 0.5% $2.145 0% 100% $0.088() 1.308 $ 114.04 GSS - Comml -Energy TOD 13 17.515 0.1% $ 1.216 0% 100% $0.0700 1.347 $93.53 GSL - Comml - Time of Day 1 10,660 -0.3% $752 0% 100% $0.0720 0 $0.00 Outdoor Area Lighting 16 0 0.0% $230 0% 100% N/A N/A N/A Res Time of Day 0 0 #DIV/0! $0 0% 100% #DIV/0! #DIV/0! #DIV/0! RMNP - Administrative 2 711 12.2% $38 0% 100% N/A N/A N/A 10.063 avg $853,192 100% annual revenues at this pace: $10,238,301 budget: $10,208,573 projected over/under: | $29,728 | j *32 % 32 22323:d# 22 0 42 2 g -91-2 $95:92* C M re' 4 =4 - 0,- A % 5 EC Â©*t gaN GO er h %% emEÂ© W 06 2 m 4 $ R -- el -tr)Â©00 88 0*%80 000 00Â©Â©d 21*E~- 00 00 0 * (I 0 *t-19 22 8% 93% Cl 7 990 f** --1- N--ra oornt-Â·Â· *M/0 . En 149 Do erl â€¢rb M% 0 0 0Â© 10*Orn O 000 -* 3â„¢ *g@2 MU ./ - R aw i 55% 3 8~ b 0 MONTH TO DATE YEAR TO DATE BUDGET vs. YTD lity Sales 770,549 781,021 10,472 5,947,099 6 266,323 0.080 .082 10,208,573 6,213,422 6 % her 32,819 (19,599) 2 537,019 180,683 3 % Total Revenu ,967 813,840 (9,127) 6,2 5 10,745,592 6,394,105 OL*'05 0*6'00Â£ [000 I 00'0 089'* 0Lt'09 Off' 9 0 00!AJOS MoO 9Z0'ZLE LEI '8ZE' 1 500 0 900'0 4/*'9 9E0'ELIâ‚¬ off'L [t (0[Â£'99) 6L6'69 6*9'E R!deo 9 860'5 I 9 C99'*Â£6 800.0 Â£000 (091'101) 860'5[9 8Â£6'Â£[5 (Â£*6) 26Z'OL 6/Â£'69 ino Slejsuati Bu!)81@d~ Beginning unrestricted (usable) fund balance 4,927,864 3,195,309 $3,195,309 $3,195,309 684 358,472 (14,788) 2,258,481 2,348,950 (90, 69) 0.030 0.031 4,785,000 2,348,950 t66'581'9 ZVL'68Â£'I I 0Â£00 Â£900 (966'692) *66'982'5 666'610'9 (fzo'10 tiâ‚¬'DL 10Â£'[IL Saimipu@dxil 18101 111'801'I (051*9) (ZI/.58) III'BOI'I EZE'Â£6 I'I (091'of) 9[ 5'IL 999'[[ i (Ze:!deo atoJaq salnjipuodxo 069'+69 V/N 069'*69 069'*69 0 (OLE' 1) COLE'I) 0 Â§03.IneS 10410 01 poleÂ®Ile/p@Ar@001 4Â§80 10&M Expenses 638,30 602,053 36,250 4,033,461 4,248,400 (214,939) 0.0 8,786,013 4,248,400 108'ZOA (051Â»9) 8L<'609 10*08'I Â£2'Â£6 it (OD' [ f) 9*E'OL 999'111 qiuoul 101 uo!1!sod 'Iseo u! 20ueql OIl'866't,$ 651'155'1$ 0[ I'866'M 0 [['866'*S ajumeq pury (@Iqusn) poioulsaiun BuipuH VAR VAR Per kWh Per kWh 2006 2007 Administration and General 84,970 (86) (151,495) Distribution and Mainten 130 112,338 50,792 04,260 38 04 Customer Billing and Accounts 46,273 332 CASH FLOW COMPARISON Operation and Maintenance Expense AAO SinUOAOJ Jo KouO!OUOPBSOOXH) 181O1qns LIGHT AND POW 2006 Revenues Expenditures t I 1 1 1 1-1 1 1 -[, 1 L L -2,--- rb 1 1 ~8Â·344*.:DI,ifygrFE78:*1" 42.,875ieMâ‚¬Ekti A:o Â· - ..~~.. 1// 1 1 1 1 \ 11 1 1 1 1 1 1 1 <11. 0 0 n o n n n (7 Â£77 n n <65 Â¤ Budgeted Revenues luenno le SenuaAehl â€¢ Goed L&P Revenue Progress 04 296 PhÂ¥ 73*Di y 0 4 1 1 > O Z i 1 6 T 0 0 < J C J h 6- (0 -g LL C CO 0 0 9001 - ZOOZ - , 56000 1 1 1 1 Actual L&P revenues over/beyond Budget 3.00% - 2.00% 1.00% %00-Z- Â°/000'E- . 9?8 . . -r : 186png o WJ Actual .P Budget v Projected Actuals, through July 2006/2007 01, MONTHLY PEAK DEMAND 25500 23500 21500 -0- 2005 -re-2006 \ 19500 -<>- 2007 - ' 17500 ,/fl 15500 D- 13500 11500 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec MONTHLY ENERGY PURCHASES 14,000 Ir- 12,000 7. 7 =m 4 4/ 10,000 2 3 3 - - . 35 $ 4, - - . : I 4:' 52. 9 E f., :3. #Vt, 3 5~;i % 4 & 02005 $., 2 35 4.F 2 42 0, $ b 2 54 7,2 2 , 0 %9 t. 02006 2 8,000 % i Â© 2% 4 4 . 2 4 #9 %1 2Â¢11(Effi ff: I . 02007 =4 i 35 % , /, //. U 0 54 -2 0, 4,- E U j 9 2 A- 51 0. 4 2 / 9 9 4.: %2 2 4 1 0 %1 6,000 00- M A-: *v %= - 2.: â‚¬. 4- 2 2 if â€ž I. m I m m I 3 4 m f i im Aff- 3 m : 33< 2- FE--: 020 M i %< 1 3 *t- 0. 4 L~ *' iti F Â¢>'. M 35'. 4.- / 4,000 :f . *1 21 4 â‚¬ 3 92 / m. m i I. I Â£ "5 4; 2 4, 71 49 0.4 3: 2,000 3 3 4 : 35' %2- 3 *2 41 %4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec R L&P 6 ttÂ« %*444Â»244**4*-f<~AQ#41 :4#&~~..~ 4:": 5 N 44<:<20%#/#Ad:r:41'Jix" YTD ENERGY PURCHASES 140,000 120,000 1: 100,000 2.93% YTD 2007 VS 1 N F Ir- 1-. 2006 80,000 E ~ ff i 0 2005 [1 02006 60,000 i i s .2007 40,000 1 [ -:1 20,000 â€ž1111111111111 ~ ~ * 1 . Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD POWER COST vs. BUDGET ($1,000) 0BUDGET OACTUAL 5,000 4,500 4,000 7 4 96 3,500 --- --- --- ---- 3,000 -- -- --- --- v.Â· .v.Â· .- -r:--= fe a: 22: >7< 8% 2,500 ~~~- p .:.:: ::%: 1-3 i *: 2,000 - -- - X 2 83 M 1,500 . E- R 9 % lit _ 3 _ 3 M _* XC 0'?11Â§ 1,000 - L.X... ..... Â· e.> XA Â»: â‚¬. >x :kt .>..6 ... 500 1% 8 Â¥ 84 4 & m %3 tÂ·Â·Â·1â€¢ V I /: >X .: I: .X. : â€¢X .. E_ E_ 3 %_ E Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec R L&P 7 YTD MWH Purchased 1 :' . .-/: .:I ELECTRIC SALES BY MONTH ($1,000) 1,200 1,100 3- 1,000 1 - 900 -t 7 - 800 02005 -- 2 8 -1 -1 w m 2006 700 1111 1 1 -6 F -4 : 3 4 * â‚¬ --- 0 2007 B;i : i . g -t# 2 ./ 600 ; #' 4 Rk 2% 5 500 ~; ~ I + 1#ti 400 ~ ~ t~ ~-~ # R F * I & i k 300 ' Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YEAR TO DATE ELECTRIC SALES ($1,000) 12,000 4.48% 2007 YTD VS 2006 I10,303,317 10,000 0 2005 - 8,000 - 8 2006 - 6,000 0 2007 -- -Budget -- 11 0 %. f ~ .4 4,000 - o Frnff f ~ 2,000 -~ - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec R L&P 8 IF*. A 12 2 2 22 f $ 6\ $ --00 'n 1,1 0 a rn /1 0 5 a~ r. 0 e 0 OVIC'COW â‚¬) â€¢A 9 ~C> rm miÂ· \0 e. d el 9 95- - = 'ri ener,-0000 ./ co 5 A 2 21 9 R &1 ./WOI'll er, el ./ .1 b /1 el 2 0 - M I 01 e 2Â§5.8 44Â©d t-4 4 4 2 r. 0% R St Z X q M en-rn-e - #% 0 3 03*0 8 2 8 0,000.0 E =88=7 - 61 9 2 - W Â©00 2.4 *SEE# 5% 0 01 .1 00 en - e 4 4 4 4 Â§%%%Â§ *ggia@Â§8 Â§ ddood doddood d --M--00 0 8 6% Mi Â§ go 0000000 C . .0 0 009Â©000 Â§ 0000 coodood o RE* $9/3,40% R 96 C tall. 2 0 =Â«Gi vn â€¢r, co â€¢r: + c wri - r I m -- 8% . .... rne[N~,q gaN EMEEM clm-,LOO, M MOOWN RE==g 23%84 In 91 - el - M- A rn W on 2Â§ gREAKÂ° '010'9 >. 0, 8:R#5; ur'-tric *8884 22224 er,-01-h -flm-N 0 9 E O. i o. 9 - cr< = 0 .. rl m . ..1 b 2% ES#*R OUE 0 0 boo'.C\- I. 1 -- ON =un C. rA -- 2 * 2 n R. = 8 02&2202 0 /4 Moo-r. : 7.51 - 71 4 N * 2 0 St.:R* a _ i . 2260*EF- 8 ~r /E 01 - & 3 .El 0 E % 1 2 9 1 3 0& 8 6 M U MONTH-TO- DATE MONTH TO DATE YEAR TO DATE 1(EAR TO DATE VAR VAR Per YTD YTD % 007 of Budget Â§02 SE 38Â£'EE IER'E59 (Rl'<Xyl 5LI'0+E 1Â£81~59 959'Elf ZEO'La #69'981 (%4Â£ 0,1, 41uoul 103 uoutsod qsuo m @:uutio Beginning unrestricted (usable) fund balance 3,763,389 3,297,192 $3.297,19 EZO'096'[$ Z.*0'ZIL'26 EZO'056'Â£$ EZO'056'ES .Juquq puzu (alqusn) polouise.}um ampug 6 9 ISO'OOI 0000 000-0 (008'51 6Â£9'09 809'II 56Â§'I! InO S.I@Jsuu.11 tiuntuado 6Â£19Â£'t Â£6Â£'SE5'E LOO-0 900'0 c 86Â£'19Â£'i 616'ElI'I 68*'Â£E PIF'96! 666'6!Z Sal=!puadia Fol 40 170 1 WN (1Â·0611)11 *06*01 0 Â£50'8 (L*)'O 0 Sninos .12410 01 pmBjOITUROA!00@J qSED 000-0 000-0 999* 160'SE Z08'9 E81'I I 35,979 1, 4,688 26,511 0. Plant Development Tap Fees 131,552 2,126 I LEG'LA 959'ZIt 680'~Â£9 I69't61 (ROE'Or'Ej (lutid,33 aiquaq sainitpuadxe Â£I'tEE'l I017'PIE't 61 VOI'SLI osu@dxg nueug lutupy puu uo!191@do lulo 334,338 listration and Genernl 46,691 bution and Maintenance mer Billing and Accounts 1040 SOnU@Aal,;0 X0110!3!Jop/ssom~3) 11]10 1qns H FLOW COMPARISON and Maintenance Expense cation WATER FUND Revenues { 861 4 TOWN OF ESTES PARK WATER DEPARTMENT TRENDS Type Suinmary Date July-07 12 - month moving average Total % Total % of % of Avg Avg Avg # of accts Gal Growth Revenues Tot Revs Cum Rev/Gal GaUCust Rev/Cust Urban Residential 2.687 12,243,871 -1.8% S76,621 37% 37% $0.4)07 4,564 $28.54 Urban Commercial 769 1 3,265,292 -0.7% S52.188 26% 63% $().(H)4 17,321 $68.03 Rural Residential 1.306 4,425,026 -1.0% %53.I99 26% 89% $().() 13 3,394 $40.76 Rural Commercial 93 1,650,602 -9.0% $10,757 5% 94% $0.012 17,239 $113.43 Bulk Water 1.395.972 2.0% S 1 1.71 1 6% 100% $().()()9 avg: $204,476 100% annual revenues at this pace: $2,453,713 budget: $2,245,572 projected over/under: | %209.141 | C CD L L J 0 CO (D J C a) 03 >0 a) CO of 0- . a24&1-1743%22;115Â·,9-44~~;~~~ .1.6 - 2006 ZOOZ - oea AON 100 des 6nv Inr unr XeIN Jdv Jel/\1 qe=1 uer Actual Water revenues over/beyond Budget 16.00% 14.00% 12.00% 10.00% %00'8 %00'9 %00.4 %00-Z ' ' ' ' ' 5000.0 ..~~. i . .~ .. i 1 kly-4 -i;Â·B~ $2,250,000 , O Budget ienjov i + ZOOE 900Z Annual Water Budget v Projected Actuals through May 2006/2007 $2,450,000 $2,400,000 $2,350,000 $2,300,000 000'001'ES 000'09L'ES 000'OOL'Z$ 000'090'2$ 000'000'1$ 000'096'US 8/13/2007 Water Sales by Month ($) 350,000 300,000 / 250,000 -- - 3 5-j 1, 1 200,000 -- f * -7 Â¤2005 -t. /1 /1 --3 4~4 4-F, 0 02006 150,000 _87 -7 -r- -~.7 -3 5 5 5 1 3 : -a 0 2007 41 5 : Fl # 3 3 5 * 3 5 100,000 4 4 ,/30005%% '/ 4.1 /, t. 'h ' I . / f ki 51 3 : El 5 1, /1 1, // 9. 5%/3@12%-54-%038 50,000 / ~ / / # 5 141 , 14 0 _-#1_.a-- -a--IL-t- 1 gr 4 j j _ 0 1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Water Sales Year-To-Date ($1,000) 3,000 $2,816,572 2,500 - ' 02005 - 2,000 - -- - 1 ~ 2006 ~ -- - - ~2007 | 2 7 7 / 1,500 -_. -Budget ~- _ _ -7 4 / 0.03% 2007 YTD VS 2006 1,000 -'.11 9 500 --- - nfl R 1 8 " â‚¬ I. / o IL Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec RW5 Â»aNNA\\4) 99Â©43'611:#3.84& tooa,m...nx ..~*.. 0 4 2..94.1.%06 :8:4614Â©40:% 4Â»636>62..SINÂ©AÂ»~..../ /4 Â»Â»4 33, + Â».4 Â«Â».4.432%.X, %