item 21: Quarterly Financial Rpt — original pdf

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Item 21 Austin Energy Quarterly Financial Report 4th Quarter FY 2021 (July - September) Mark Dombroski Chief Financial Officer November 8, 2021 © 2018 Austin Energy Disclaimer Certain information set forth in this presentation contains forecasted financial information. Forecasts necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance. Although the forecasted financial information contained in this presentation is based upon what Austin Energy management believes are reasonable assumptions, there can be no assurance that forecasted financial information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forecasts. In addition, this presentation contains unaudited information and should be read in conjunction with the audited Annual Comprehensive Financial Reports for the City of Austin, which was published on March 18, 2021: https://assets.austintexas.gov/financeonline/downloads/comprehensive_annual_financial_report/comprehensi ve_annual_financial_report_2020.pdf 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 Generally compliant with all financial policies. Contingency and Capital Reserve balances below minimums but total cash above minimum of $457m. $ 1,287 Million Revenues Operating revenues at September are 9% under budget due to decreased Power Supply Revenue due to the February winter storm as well as decreased Base revenue. Balance sheet is liquid and adequately capitalized. Working Capital decreased $72M primarily due to funding CIP and decreased base revenue. Generally meeting financial metrics supporting AA credit rating. $937 Million Expenses Operating expenses are 10% under budget due to lower Power Supply costs due to the February winter storm. Market competitiveness – System average rates remain consistent at 2.5% below state average for CY 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 https://assets.austintexas.gov/financeonline/downloads/comprehensive_annual_financial_report/comprehensive_annual_financial_report_2020.pdf 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 Partial Compliance Partial Compliance Full Compliance Debt Service Coverage 2.0x at September Contingency and Capital Reserve balance below minimums but total cash above minimum of $457m 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 AA Standard & Poor’s Global Ratings 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 218 Days Actual 2.0 Actual -3% Actual 54% 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, 2021 $ f o s n o i l l i M $700 $600 $500 $400 $300 $200 $100 $0 $419.0 $324.5 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, 2021 $359.4 $272.1 $ 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, 2021 Favorable (Unfavorable) Favorable (Unfavorable) Millions of $ Actual Budget Amount % Prior Year Actual 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 $1,287 937 $350 2 (161) $191 (31) (114) (8) (13) (6) (5) (143) ($129) $1,407 1,045 $362 9 (159) $212 (31) (114) (8) (13) (6) (6) (45) ($11) ($120) 108 ($12) (7) (2) (21) 0 0 0 0 0 1 (9%) 10% (3%) (74%) (1%) (10%) 0% 0% 0% 0% 0% 8% (98) ($118) (219%) (1049%) $1,379 1,014 $365 11 (153) $223 (30) (111) (9) (11) (6) (6) (80) ($30) ($92) 77 (15) (9) (8) ($32) (1) (3) 1 (2) (0) 1 (63) ($99) % (7%) 8% (4%) (77%) (5%) (14%) (6%) (3%) 8% 9% 0% (2%) (78%) (337%) 14 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 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 $45 $25 $5 -$15 -$35 -$55 -$75 -$95 -$115 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, 2021 Type of Financing Type of Project 11% 48% 41% Cash Debt Contributions in Aid of Construction Distribution District Cooling Transmission Joint Projects General Substations Power Production $0 $50 $100 $150 Millions of $ FY 2021 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 September 2021 $2,130 Difference between Load Zone And Power Supply Costs $1.8B or 87% $281 ($12) ($60) ($381) ($1,396) Load Zone Owned Assets Contracted Assets GreenChoice ® and Value of Solar Bilateral and Hedging Net Power Supply 19 $2,500 $2,000 $1,500 $1,000 s n o i l l i M $ $500 $0 ($500) ($1,000) ($1,500) ($2,000) t s o C e u n e v e R Austin Energy Quarterly Financial Report Financial Statements 20 $ in Millions Assets Cash Current Assets Capital Assets Long-Term Assets Balance Sheet Snapshot Sep 2020 Sep 2021 Capital Reserve $70m $402 390 2,967 2,066 $330 482 3,037 2,238 Power Supply Stabilization $110m Contingency Reserve $108m Working Capital and Reserves $618m Working Capital $330m Total Assets $5,825 $6,087 Liabilities and Fund Equity Current Liabilities $284 $324 $162 Long-term Liabilities 3,180 3,329 Deferred Inflow of Resources Retained Earnings Total Liabilities & Fund Equity 487 612 1,874 1,822 $5,825 $6,087 $200 $150 $100 $50 $0 $77 $63 $37 $13 4QtR 2020 1QtR 2021 2QTR 2021 3QTR 2021 4QTR 2021 Commercial Paper Program Limits: Tax Exempt $200m Taxable $100m $300m 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 9/30/2020 9/30/2021 Change Cash Accounts Receivable (net) 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 Power Supply Over-Recovery Non-PSA Over-Recoveries Revenue Bonds Commercial Paper Other Long-Term Liabilities Retained Earnings Total Liabilities and Fund Equity $330 $402 142 0 81 107 110 70 236 178 1,532 2,967 5,825 176 7 28 1,928 162 1,650 ($72) 204 62 21 21 85 4 108 1 110 - 70 - 241 5 180 2 1,701 169 3,037 70 262 6,087 207 31 105 98 16 (12) 2,089 161 77 (85) 1,771 121 1,874 1,822 (52) 262 6,087 5,825 Income Statement $ in Millions 12 Months Ending 9/30/2020 9/30/2021 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 Capital Ratio $953 420 368 764 286 ($45) $121 (111) ($35) 2.1 53% $956 324 272 764 288 ($44) $105 (114) ($53) 2.0 54% Average Number of Customers Total Sales in Gigawatt Hours 507,660 520,757 13,212 13,063 2.6% (1.1%) 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 2020 FYTD 2021 FYTD 2020 FYTD 2021 Austin Energy Quarterly Financial Report Market and Industry Analysis 23 Annual Change in Customers and Consumption Change in Consumption Growth in Customers During FY 2021, the amount of electricity consumed slightly decreased by 1.1% MWh from prior year due to weather and COVID related shifts in usage. During FY 2021, the number of customers increased by 2.6%, from 507,660 to 520,757. New residential customers account for 97% of the growth in customer count. 1.1% 2.6% ↑ 24 How the Analysis is Performed Affordability Goal: Competitiveness Metric EIA 861 Database for CY 2001 - 2020 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 97.5% of the Texas average rate, meeting the Affordability Goal. 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: U.S. Energy Information Administration Form 861, October 2021 Austin Energy Texas Entities (filtered) 26 Affordability Goal: Competitiveness Metric Average Annual Rates by Customer Class for CY 2020 Austin Energy Texas Average 11.75¢ 10.56¢ 8.15¢ 7.00¢ 9.01¢ 9.24¢ Residential Commercial & Industrial System Source: U.S. Energy Information Administration Form 861, October 2021 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 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: U.S. Energy Information Administration Form 861, October 2021 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 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: U.S. Energy Information Administration Form 861, October 2021 Austin Energy Texas Entities (filtered) 29 Affordability Goal: Competitiveness Metric System Average Rate for CY 2020 SOUTHWESTERN PUBLIC SERVICE CO 5.63¢ CITY OF NEW BRAUNFELS - (TX) SOUTHWESTERN ELECTRIC POWER CO AUSTIN ENERGY TEXAS BLUEBONNET ELECTRIC COOP, INC EL PASO ELECTRIC CO PEDERNALES ELECTRIC COOP, INC CITY OF SAN ANTONIO - (TX) RELIANT ENERGY TXU ENERGY RETAIL CO, LLC BROWNSVILLE PUBLIC UTILITIES BOARD GREEN MOUNTAIN ENERGY COMPANY CITY OF DENTON - (TX) AMIGO ENERGY Source: U.S. Energy Information Administration Form 861, October 2021 8.09¢ 8.19¢ 9.01¢ 9.24¢ 9.32¢ 9.56¢ 9.66¢ 9.76¢ 9.80¢ 10.05¢ 10.43¢ 11.78¢ 12.01¢ 12.50¢ 30 Affordability Goal: Competitiveness Metric Residential Average Rate for CY 2020 CITY OF NEW BRAUNFELS - (TX) SOUTHWESTERN PUBLIC SERVICE CO SOUTHWESTERN ELECTRIC POWER CO PEDERNALES ELECTRIC COOP, INC BLUEBONNET ELECTRIC COOP, INC AUSTIN ENERGY CITY OF SAN ANTONIO - (TX) BROWNSVILLE PUBLIC UTILITIES BOARD TEXAS EL PASO ELECTRIC CO CITY OF DENTON - (TX) AMIGO ENERGY GREEN MOUNTAIN ENERGY COMPANY RELIANT ENERGY RETAIL SERVICES TXU ENERGY RETAIL CO, LLC 9.75¢ 10.03¢ 10.29¢ 10.33¢ 10.45¢ 10.56¢ 10.74¢ 10.98¢ 11.75¢ 12.06¢ 13.11¢ 13.20¢ 13.42¢ 13.94¢ 14.21¢ Source: U.S. Energy Information Administration Form 861, October 2021 31 Affordability Goal: Competitiveness Metric Residential Average Monthly Consumption for CY 2020 EL PASO ELECTRIC CO AUSTIN ENERGY GREEN MOUNTAIN ENERGY COMPANY SOUTHWESTERN PUBLIC SERVICE CO CITY OF DENTON - (TX) BROWNSVILLE PUBLIC UTILITIES BOARD RELIANT ENERGY RETAIL SERVICES CITY OF SAN ANTONIO - (TX) AMIGO ENERGY SOUTHWESTERN ELECTRIC POWER CO TEXAS TXU ENERGY RETAIL CO, LLC CITY OF NEW BRAUNFELS - (TX) PEDERNALES ELECTRIC COOP, INC BLUEBONNET ELECTRIC COOP, INC 710 851 937 993 994 1,038 1,093 1,099 1,127 1,133 1,144 1,153 1,209 1,209 1,225 Source: U.S. Energy Information Administration Form 861, October 2021 32 Affordability Goal: Competitiveness Metric Residential Average Monthly Bill for CY 2020 EL PASO ELECTRIC CO AUSTIN ENERGY SOUTHWESTERN PUBLIC SERVICE CO BROWNSVILLE PUBLIC UTILITIES BOARD SOUTHWESTERN ELECTRIC POWER CO CITY OF SAN ANTONIO - (TX) CITY OF NEW BRAUNFELS - (TX) PEDERNALES ELECTRIC COOP, INC GREEN MOUNTAIN ENERGY COMPANY BLUEBONNET ELECTRIC COOP, INC CITY OF DENTON - (TX) TEXAS AMIGO ENERGY RELIANT ENERGY RETAIL SERVICES TXU ENERGY RETAIL CO, LLC $88.58 $89.85 $99.61 $114.01 $116.60 $117.95 $117.96 $124.85 $125.67 $128.08 $130.26 $134.37 $148.72 $152.27 $163.86 Source: U.S. Energy Information Administration Form 861, October 2021 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.