Item 17: 3rd Quarter Financial Briefing — original pdf

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Item 17 Austin Energy Quarterly Financial Report 3rd Quarter FY 2020 (April – June 2020) Russell Maenius Acting Chief Financial Officer August 10, 2020 © 2018 Austin Energy Disclaimer This information is unaudited and should be read in conjunction with the audited Comprehensive Annual Financial Reports for the City of Austin, when published on: http://austintexas.gov/service/current-comprehensive-annual-financial-report 2 QUARTERLY Financial Report Agenda Executive Summary Financial Policy Compliance Financial Performance Measures Actual to Budget Analysis Financial Statements Market and Industry Analyses 3 Austin Energy Quarterly Financial Report Executive Summary 4 Executive Summary Substantially compliant with all financial policies. Capital Reserve balance below minimums but total cash above minimum of $414m. $ 958 Million Revenues Operating revenues trended close to budget through June. Balance sheet is liquid and adequately capitalized. Cash decreased $26M from prior year primarily due to increases in AR and Inventory. Generally meeting financial metrics supporting AA credit rating. Received credit upgrade from Fitch Ratings in May 2019. $760 Million Expenses Operating expenses exceed forecast by 1.3% primarily due to higher costs in electric service delivery. COVID-19 pandemic impacts Austin Energy’s energy and load. This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 5 Austin Energy Quarterly Financial Report Financial Policy Compliance 6 Financial Policy Compliance Financial policies are memorialized and adopted by ordinance each year during the budgeting process Compliance Debt Reserves Operating Non-Compliance Debt Policies Reserves Policies Operating Policies Full Compliance Partial Compliance Full Compliance Capital Reserve balance below minimums but total cash above minimum of $414m This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 7 Austin Energy Quarterly Financial Report Financial Performance Measures 8 Financial Performance Measures Standard & Poor’s Global Ratings AA Achieved November 2018 Excessive Liquidity Coverage Efficiency Leverage Deficient Days Cash on Hand Debt Service Coverage Ratio Operating Margins Debt to Capitalization Minimum > 150 Days Minimum > 2.0 Minimum > 10% Minimum < 50% Actual 209 Days Actual 2.3 Actual 2% Actual 52% Excludes General Fund Transfer This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 9 Austin Energy’s Affordability Goal has Two Metrics Financial Performance Measures Compliance Affordability Competitiveness Non-Compliance Affordability Metric Competitiveness Metric Full Compliance Since 2013 Non-Compliance Since 2016 Maintain system average rates at or below 2% annual compound growth rate that began October 2012. Maintain an average annual system rate in the lower 50% of all Texas utilities serving residential, commercial and industrial customers as measured by published data from the Energy Information Administration (EIA) Form 861. This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 10 Austin Energy Quarterly Financial Report Actual to Budget Analysis 11 Actual to Budget Analysis Budget Based Operating Revenues Fiscal Year Through June 30, 2020 $ f o s n o i l l i M $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Billed Base Power Supply Regulatory Transmission Miscellaneous Community Benefit Actual Budget This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 12 Actual to Budget Analysis Budget Based Operating Expenses Fiscal Year Through June 30, 2020 $ f o s n o i l l i M $300 $250 $200 $150 $100 $50 $0 Actual Budget This information is unaudited and should be read in conjunction with the audited Comprehensive Financial This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 13 Actual to Budget Analysis Budget Based Fund Summary Fiscal Year Through June 30, 2020 Variance to Budget Variance to Prior Year Favorable (Unfavorable) Favorable (Unfavorable) Millions of $ Actual Budget Amount % Amount % Prior Year Actual Operating Revenues Operating Expenses Operating Income (Loss) Interest Revenue Debt Service Income (Loss) Before Transfers Administrative Support General Fund Economic Development CTM Fund Voluntary Utility Assistance Fund Other City Transfers Internal Transfers / CIP Excess (Deficiency) of Revenues $958 760 $198 9 (98) $109 (22) (83) (7) (8) (3) (2) (62) ($78) $959 750 $209 10 (98) $121 (22) (83) (7) (8) (3) (2) (62) ($66) ($1) (10) ($11) (1) ($12) 0 0 0 0 0 0 0 0 0% (1%) (5%) (12%) 0% (10%) 0% 0% 0% 0% 0% 0% 0% ($12) (19%) $976 777 $199 12 (76) $135 (22) (82) (6) (7) (1) (2) (90) ($75) ($18) 17 ($1) (3) (22) ($26) 0 (1) (1) (1) (2) 0 28 ($3) (2%) 2% (1%) (26%) (29%) (20%) (2%) (1%) (6%) (12%) (416%) (51%) 31% (6%) This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 14 Actual to Budget Analysis Actual to Budget Retail Energy Sales ) h w G ( s r u o H t t a w a g i G 1,600 1,400 1,200 1,000 800 600 400 200 0 Actual Budget This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 15 Actual to Budget Analysis Actual to Budget Non-Power Supply Revenues $ f o s n o i l l i M $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Actual Budget This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 16 Actual to Budget Analysis Actual to Budget Power Supply $ f o s n o i l l i M $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Actual Cost Budget PSA Revenue This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 17 Capital Improvement Plan Summary Actual to Budget Analysis Fiscal Year Through June 30, 2020 Type of Financing Type of Project $32.0 $62.0 $101.2 Cash Debt Contributions in Aid of Construction Distribution District Cooling Transmission Joint Projects General Substations Power Production $0 $20 $80 $100 $60 $40 Millions of $ FY 2020 Spend Plan Year-to-Date This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 18 Power Supply Adjustment Cost Components Twelve Months Ending June 2020 $606 Difference between Load Zone And Power Supply Costs - $213M or 35% $393 $35 $12 ($16) Load Zone ($244) Owned Assets Contracted GreenChoice ® Bilateral Assets and Value of Solar and Hedging Net Power Supply 19 s n o i l l i M $ $700 $600 $500 $400 $300 $200 $100 $0 ($100) ($200) ($300) t s o C e u n e v e R Austin Energy Quarterly Financial Report Financial Statements 20 Balance Sheet Snapshot $ in Millions Assets Cash Current Assets Capital Assets Long-Term Assets Jun 2019 Jun 2020 $396 287 2,988 1,505 $370 336 2,993 1,895 Capital Reserve $70m Power Supply Stabilization $110m Working Capital and Reserves $657m Working Capital $370m Contingency Reserve $107m Total Assets $5,176 $5,594 Liabilities and Fund Equity Current Liabilities $231 $252 Long-term Liabilities 2,681 3,011 Deferred Inflow of Resources Retained Earnings Total Liabilities & Fund Equity 389 453 1,875 1,878 $5,176 $5,594 $266 $300 $250 $200 $150 $100 $50 $0 $128 $73 $50 $27 3QTR 2019 4QTR 2019 1QTR 2020 2QTR 2020 3QTR 2020 Commercial Paper Program Limits: Tax Exempt $200m Taxable $75m $275m This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 21 GAAP Financial Summary Comparative Statement of Net Position $ in Millions 6/30/2019 6/30/2020 Change Cash Accounts Receivable (net) Power Supply Under-Recovery Non-PSA Under-Recoveries Debt Service Contingency Reserve Power Supply Stabilization Reserve Capital Reserve Nuclear Decommissioning Reserve Other Restricted Assets Other Assets Capital Assets Total Assets Other Current Liabilities Non-PSA Over-Recoveries Revenue Bonds Commercial Paper Other Long-Term Liabilities Retained Earnings Total Liabilities and Fund Equity $396 127 0 1 26 104 106 68 228 114 1,017 2,988 $5,175 144 26 1,683 266 1,181 1,875 $5,175 $370 154 5 0 27 107 110 70 235 168 1,355 2,993 $5,594 163 32 1,912 128 1,481 1,878 $5,594 ($26) 27 5 (1) 1 3 4 2 7 55 338 5 $419 19 6 229 (138) 300 3 $419 Income Statement $ in Millions 12 Months Ending 06/30/2019 06/30/2020 Operating Revenues Power Supply Revenues Power Supply Expenses Non-Power Supply Expenses Depreciation Expense Operating Income/(Loss) Other Revenue (Expense) General Fund Transfer Net Income/(Loss) Debt Service Coverage Debt Equity Ratio $941 464 459 688 173 $85 $51 (110) $26 3.5 51% $968 461 412 734 249 $34 $78 (111) $1 2.3 52% Average Number of Customers Total Sales in Gigawatt Hours 493,320 505,362 9,083 9,20 6 FYTD 2019 FYTD 2020 FYTD 2019 FYTD 2020 This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on www.austintexas.gov/financeonline/finance/main.cfm 22 Austin Energy Quarterly Financial Report COVID Impacts and Austin Energy’s Response 23 1,200 1,000 800 h W G 600 400 200 0 Secondary Voltage GWh Energy Sales Jan Feb Mar April May June July 2019 2020 Commercial excludes primary and transmission voltage customers 24 Secondary Voltage GWh Energy Sales Residential Commercial l s e a S y g r e n E h W G 700 600 500 400 300 200 100 0 l s e a S y g r e n E h W G 600 500 400 300 200 100 0 Residential represents a higher proportion of load since April April Year 2019 2020 Jan Feb Mar May June July Jan Feb Mar May June July April Year 2019 2020 Commercial excludes primary and transmission voltage customers 25 Secondary Voltage Load Residential Commercial 60% 50% d a o L f o t n e c r e P 40% 30% 20% 10% 0% d a o L f o t n e c r e P 70% 60% 50% 40% 30% 20% 10% 0% Residential represents a higher proportion of load since April April Year 2019 2020 Jan Feb Mar May June July Jan Feb Mar May June July April Year 2019 2020 Commercial excludes primary and transmission voltage customers 26 Austin Energy’s Response $35 million in Electric Bill Relief for FY 2020 • Transfer $5M to the Plus 1 financial aid program from the discount program balance • Increase the CAP Discount from 10% to 15% • Reduce the Regulatory Charge for residential and commercial customers now rather than during the $25M FY21 budget process • Set all residential rates for Tiers 4 and 5 to the current Tier 3 rates for use over 1000 kwh to the inside city Tier 3 rate to reduce premium pricing for those using more energy under Stay Home – Work Safe 27 $5M $1M $4M Confidential & Proprietary ©2018 Austin Energy. All rights reserved. Austin Energy and the Austin Energy logo and combinations thereof are trademarks of Austin Energy, the electric department of the City of Austin, Texas. Other names are for informational purposes only and may be trademarks of their respective owners.