Item 11: 4QTR20 Financial Report — original pdf

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Item 11 Austin Energy Quarterly Financial Report 4th Quarter FY 2020 (July – Sept 2020) Russell Maenius Acting Chief Financial Officer November 9, 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. $ 1,374 Million Revenues Operating revenues ended the year at 1.9% under budget due to decreased base rate tiers, decreased usage and lower costs in our passthrough rates. Balance sheet is liquid and adequately capitalized. Cash is stable with a $4M decrease compared to prior year. Generally meeting financial metrics supporting AA credit rating (reaffirmed October 2020). Received credit upgrade from Fitch Ratings in May 2019. $1,017 Million Expenses Operating expenses exceed forecast by 0.6% primarily due to higher electric service delivery expenses and power supply System rate falls below State average. 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 224 Days Actual 2.2 Actual -3% Actual 53% 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 Full Compliance Since 2019 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 September 30, 2020 $ f o s n o i l l i M $700 $600 $500 $400 $300 $200 $100 $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 September 30, 2020 $ f o s n o i l l i M $400 $350 $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 Variance to Budget Variance to Prior Year Fiscal Year Through September 30, 2020 Favorable (Unfavorable) Favorable (Unfavorable) Millions of $ Actual Budget Amount % Amount % 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 $1,374 1,017 $1,401 1,011 $357 11 (152) $216 (30) (111) (9) (11) (6) (3) (80) ($34) $390 14 (154) $250 (30) (111) (9) (11) (6) (4) (80) ($1) ($27) (6) ($33) (3) 2 ($34) 0 0 0 0 0 1 0 ($33) (4920%) (2%) 0% (8%) (25%) 1% (15%) 0% 0% 0% 0% 0% 4% 1% Prior Year Actual $1,453 1,077 $376 17 (129) $264 (29) (110) (9) (10) (0) (3) (107) ($4) ($79) 60 ($19) (6) (23) ($48) 0 (1) (0) (1) (5) 0 27 ($33) (5%) 6% (5%) (38%) (18%) (19%) (2%) (1%) (6%) (12%) (833%) (27%) 25% (7%) 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 $60 $50 $40 $30 $20 $10 $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 September 30, 2020 Type of Financing Type of Project $43.9 $80.5 $135.9 Cash Debt Contributions in Aid of Construction Distribution District Cooling Transmission Joint Projects General Substations Power Production $0 $20 $40 $60 $80 $100 $120 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 t s o C s n o i l l i M $ $400 $350 $300 $250 $200 $150 $100 $50 $0 Power Supply Adjustment Cost Components Twelve Months Ending September 2020 $335 Difference between Load Zone And Power Supply Costs $33M or 10% $368 $108 ($14) ($14) e u n e v e R ($50) ($100) Load Zone ($47) Owned Assets Contracted GreenChoice ® Bilateral Assets and Value of Solar and Hedging Net Power Supply 19 Austin Energy Quarterly Financial Report Financial Statements 20 $ in Millions Assets Cash Current Assets Capital Assets Long-Term Assets Balance Sheet Snapshot Sept 2019 Sept 2020 Capital Reserve $70m Power Supply Stabilization $110m $407 399 3,004 1,801 $403 385 2,964 2,067 Working Capital and Reserves $690m Working Capital $403m Contingency Reserve $108m Total Assets $5,611 $5,819 Liabilities and Fund Equity Current Liabilities $265 $270 Long-term Liabilities 3,003 3,177 Deferred Inflow of Resources Retained Earnings Total Liabilities & Fund Equity 434 493 1,909 1,879 $5,611 $5,819 $200 $150 $100 $50 $0 $162 $128 $73 $50 $27 4QTR 2019 1QTR 2020 2QTR 2020 3QTR 2020 4QtR 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 9/30/2019 9/30/2020 Change Cash Accounts Receivable (net) Power Supply Under-Recovery 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 Power Supply Over-Recovery Non-PSA Over-Recoveries Revenue Bonds Commercial Paper Other Long-Term Liabilities Retained Earnings Total Liabilities and Fund Equity $407 149 21 79 106 108 69 232 146 ($4) $403 138 (11) (21) 81 2 107 1 110 2 70 1 236 4 178 32 1,290 1,532 242 2,964 (40) 208 5,819 163 2 8 8 28 (13) 2,014 1,928 (86) 162 135 1,459 1,651 192 1,879 (30) 5,819 208 3,004 5,611 161 1,909 5,611 - 27 41 Income Statement $ in Millions 12 Months Ending 09/30/2019 09/30/2020 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 $952 495 469 684 204 $90 $23 (110) $3 4.0 52% $950 419 367 756 283 ($37) $118 (111) ($30) 2.2 53% Average Number of Customers Total Sales in Gigawatt Hours 496,258 507,660 13,397 13,145 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 FYTD 2019 FYTD 2020 FYTD 2019 FYTD 2020 Austin Energy Quarterly Financial Report Market and Industry Analysis 23 Annual Change in Customers and Consumption Change in Consumption Growth in Customers During FY 2020, the amount of electricity consumed slightly decreased by 1.9% MWh from prior year due to COVID related shifts in usage. During FY 2020, the number of customers increased by 2.3%, from 496,258 to 507,660. New residential customers account for 95% of the growth in customer count. 1.9% 2.3% ↑ 24 How the Analysis is Performed Affordability Goal: Competitiveness Metric EIA 861 Database for CY 2001 - 2019 Texas Electric Providers Excluding Austin Energy Data is filtered to identify providers in Austin Energy’s business segment Exclude Providers of Commercial and/or Industrial Customers Only Exclude Providers With < 3% Residential Load Texas Entities (filtered) Austin Energy uses a weighted average to calculate the Texas 50% Total Retail Revenue ÷ Total Retail Kilowatt Hours = Weighted Average Retail Rate 25 Affordability Goal: Competitiveness Metric System Average Annual Rates by Calendar Year h W k r e p s t n e C 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Austin Energy improved to 97.6% of the Texas average rate, meeting the Affordability Goal. 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Source: U.S. Energy Information Administration Form 861, October 2020 Austin Energy Texas Entities (filtered) 26 Affordability Goal: Competitiveness Metric Average Annual Rates by Customer Class for CY 2019 Austin Energy Texas Average 11.79¢ 10.84¢ 8.33¢ 7.33¢ 9.19¢ 9.42¢ Residential Commercial & Industrial System Source: U.S. Energy Information Administration Form 861, October 2020 27 Affordability Goal: Competitiveness Metric Residential Average Annual Rate by Calendar Year h W k r e p s t n e C 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Source: U.S. Energy Information Administration Form 861, October 2020 Austin Energy Texas Entities (filtered) 28 Affordability Goal: Competitiveness Metric Commercial & Industrial Average Annual Rate by Calendar Year h W k r e p s t n e C 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Source: U.S. Energy Information Administration Form 861, October 2020 Austin Energy Texas Entities (filtered) 29 Affordability Goal: Competitiveness Metric System Average Rate for CY 2019 SOUTHWESTERN PUBLIC SERVICE CO 5.83¢ CITY OF NEW BRAUNFELS - (TX) SOUTHWESTERN ELECTRIC POWER CO AUSTIN ENERGY BLUEBONNET ELECTRIC COOP, INC EL PASO ELECTRIC CO TEXAS CITY OF DENTON - (TX) BROWNSVILLE PUBLIC UTILITIES BOARD CITY OF SAN ANTONIO - (TX) PEDERNALES ELECTRIC COOP, INC RELIANT ENERGY TXU ENERGY RETAIL CO, LLC GREEN MOUNTAIN ENERGY COMPANY AMIGO ENERGY 7.31¢ 8.11¢ 9.19¢ 9.24¢ 9.34¢ 9.42¢ 9.55¢ 9.61¢ 9.61¢ 9.72¢ 9.85¢ 10.19¢ 11.47¢ 12.79¢ Source: U.S. Energy Information Administration Form 861, October 2020 30 Affordability Goal: Competitiveness Metric Residential Average Rate for CY 2019 CITY OF NEW BRAUNFELS - (TX) SOUTHWESTERN ELECTRIC POWER CO SOUTHWESTERN PUBLIC SERVICE CO BROWNSVILLE PUBLIC UTILITIES BOARD PEDERNALES ELECTRIC COOP, INC BLUEBONNET ELECTRIC COOP, INC CITY OF SAN ANTONIO - (TX) CITY OF DENTON - (TX) AUSTIN ENERGY TEXAS EL PASO ELECTRIC CO AMIGO ENERGY GREEN MOUNTAIN ENERGY COMPANY RELIANT ENERGY RETAIL SERVICES TXU ENERGY RETAIL CO, LLC 8.83¢ 10.20¢ 10.23¢ 10.30¢ 10.36¢ 10.43¢ 10.69¢ 10.73¢ 10.84¢ 11.79¢ 11.99¢ 13.35¢ 13.55¢ 13.62¢ 13.95¢ Source: U.S. Energy Information Administration Form 861, October 2020 31 Affordability Goal: Competitiveness Metric Residential Average Monthly Consumption for CY 2019 EL PASO ELECTRIC CO AUSTIN ENERGY GREEN MOUNTAIN ENERGY COMPANY SOUTHWESTERN PUBLIC SERVICE CO CITY OF DENTON - (TX) BROWNSVILLE PUBLIC UTILITIES BOARD CITY OF SAN ANTONIO - (TX) RELIANT ENERGY RETAIL SERVICES AMIGO ENERGY TEXAS TXU ENERGY RETAIL CO, LLC SOUTHWESTERN ELECTRIC POWER CO CITY OF NEW BRAUNFELS - (TX) PEDERNALES ELECTRIC COOP, INC BLUEBONNET ELECTRIC COOP, INC 651 877 939 969 1,024 1,092 1,108 1,116 1,120 1,150 1,191 1,204 1,225 1,239 1,271 Source: U.S. Energy Information Administration Form 861, October 2020 32 Affordability Goal: Competitiveness Metric Residential Average Monthly Bill for CY 2019 EL PASO ELECTRIC CO AUSTIN ENERGY SOUTHWESTERN PUBLIC SERVICE CO CITY OF NEW BRAUNFELS - (TX) CITY OF DENTON - (TX) BROWNSVILLE PUBLIC UTILITIES BOARD CITY OF SAN ANTONIO - (TX) SOUTHWESTERN ELECTRIC POWER CO GREEN MOUNTAIN ENERGY COMPANY PEDERNALES ELECTRIC COOP, INC BLUEBONNET ELECTRIC COOP, INC TEXAS AMIGO ENERGY RELIANT ENERGY RETAIL SERVICES TXU ENERGY RETAIL CO, LLC Source: U.S. Energy Information Administration Form 861, October 2020 $77.99 $95.09 $99.14 $108.21 $109.82 $112.42 $118.44 $122.86 $127.25 $128.45 $132.57 $135.59 $149.49 $151.93 $166.09 33 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.