Item 9 4th Quarter Financial Report — original pdf

Backup

Item 9 Austin Energy Quarterly Financial Report 4th Quarter FY 2022 (July - September) Stephanie Koudelka Austin Energy Director of Finance November 14, 2022 © 2022 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 14, 2022: http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive _financial_report_2021.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 Austin Energy is in partial compliance with its financial policies. Combined reserves, as well as Contingency and capital reserve balances are below minimums. $1.7 Billion Operating Revenue Operating revenue FYTD is 13% over budget, primarily due to extreme summer weather which drove Power costs increases in usage. were also up due to market changes, natural gas prices, and congestion costs. Austin Energy’s bond rating was lowered by S&P to AA-, which is below our target rating of AA. Working capital decreased by $164m year over year, primarily due to current year under recovery of power supply costs including the return of the prior year over recovery from Winter Storm Uri. $(1.7) Billion Expenses w/transfers Operating expenses for September FYTD including transfers are 10% over budget, primarily due to increased power supply costs. Market Competitiveness – System average rates were 12.6% below the state average for CY 2021. This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 5 Austin Energy Quarterly Financial Report Financial Policy Compliance 6 Financial Policy Compliance Financial Policy Monitoring Financial policies are adopted by ordinance each year during the budgeting process. Compliance Non-Compliance Debt Reserves Operating Debt Policies Reserves Policies Operating Policies Full Compliance Partial Compliance Full Compliance Actual 2.2x DSC Policy minimum is 2.0x DSC and Contingency Capital Reserve balances are below minimums. In addition, our Combined reserve of $444m is below the minimum of $480m This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 7 Austin Energy Quarterly Financial Report Financial Performance Measures 8 AA- Standard & Poor’s Global Ratings Lowered in August 2022 Excessive Deficient Liquidity Coverage Efficiency Leverage Days Cash on Hand Debt Service Coverage Ratio Operating Margins Debt to Capitalization Minimum > 150 Days Minimum > 2.0 Minimum > 10% Minimum < 50% Actual 118 Days Actual 2.2 Actual 2.1% 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 http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 9 Austin Energy’s Affordability Goal has Two Metrics Compliance Non-Compliance Affordability Competitiveness 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, industrial customers as measured by published data from the Energy Information Administration (EIA) Form 861. commercial and This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 10 Austin Energy Quarterly Financial Report Actual to Budget Analysis 11 Actual to Budget Analysis: Retail Sales ) h w G ( s r u o H t t a w a g i G 1,800 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 http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 12 Actual to Budget Analysis: Revenue Fiscal Year Through September 30, 2022 635 483 s n o i l l i m $ 700 600 500 400 300 200 100 0 Billed Base Power Supply Regulatory Transmission District Cooling 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 http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 13 Actual to Budget Analysis: Expense Fiscal Year Through September 30, 2022 600 578 422 s n o i l l i m $ 500 400 300 200 100 0 This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 14 Actual Budget Actual to Budget Analysis: Fund Summary Budget Based Fund Summary Fiscal Year Through September 30, 2022 Variance to Budget Favorable (Unfavorable) Millions of $ Actual Budget 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 $1,682 1,293 $389 5 (163) $232 (28) (114) (9) (12) (1) (3) (62) $2 $1,486 1,139 $347 4 (163) $188 (28) (114) (9) (12) (1) (3) (40) ($19) $196 (154) $42 1 (0) $43 0 0 0 0 0 0 (22) $21 13% (14%) 12% 24% (0%) 23% 0% 0% 0% 0% 0% 0% (55%) 111% This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 15 Actual to Budget Analysis: Power Supply Adjustment s n o i l l i m $ $ 90 80 70 60 50 40 30 20 10 0 Actual Cost Budget Cost 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 http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 16 Power Supply Adjustment Cost Components Twelve Months Ending September 2022 $1,113 Difference between Load Zone And Power Supply Costs: $569m or 51% $544 ($98) ($16) ($60) Load Zone ($395) Owned Assets Contracted Assets GreenChoice ® and Value of Solar Bilateral and Hedging Net Power Supply This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 17 s n o i l l i m $ $1,200 $1,000 $800 $600 $400 $200 $0 ($200) ($400) ($600) t s o C e u n e v e R Capital Improvement Plan Summary Actual to Budget Analysis Fiscal Year Through September 30, 2022 Type of Project 75% of Spend Plan Type of Financing 31% 21% 47% Cash Debt Contributions in Aid of Construction Distribution District Cooling Transmission Joint Projects General Substations Power Production $0 $50 $100 $150 Millions of $ FY 2022 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 http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 18 Austin Energy Quarterly Financial Report Financial Statements 19 Balance Sheet Snapshot $ in Millions Cash Other Current Assets Operating Reserves Nuclear Decommissioning Reserve Other Restricted Assets Capital Assets Other LT Assets & Deferred Outflows Total Assets and Deferred Outflows Other Current Liabilities Revenue Bonds Commercial Paper Other LT Liabilities & Deferred Inflows Retained Earnings Total Liabilities, Deferred Inflows, and Fund Equity 9/30/2022 9/30/2021 $165 $329 313 292 279 288 243 241 326 273 3,022 3,047 1,777 1,632 6,125 6,102 286 199 1,987 2,089 171 77 1,867 1,920 1,814 1,817 6,125 6,102 Capital Reserve $68m Power Supply Stabilization $107m Contingency Reserve $104m Working Capital and Reserves $444m Working Capital $165m $171 $145 $118 $99 $77 $200 $150 $100 $50 $0 4QTR 2021 1QTR 2022 2QTR 2022 3QTR 2022 4QTR 2022 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 http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 20 Income Statement and Other KPIs Fiscal Year Ended 9/30/2022 9/30/2021 $1,039 $947 Pass-Through Over (Under) Recovery ($ in millions) 5 16 (16) (2) (60) $ in Millions 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 25 5 (15) (35) (55) (75) (95) (115) (135) (155) (175) 325 273 783 281 ($65) $122 (114) ($57) 1.9 54% 635 578 796 265 $35 $76 (114) ($3) 2.2 54% (165) Power Supply Regulatory Community Benefit FY22 YTD Activity September 2022 Balance Average Number of Customers 530,698 520,757 Sales in Gigawatt-hours 14,281 13,063 2% YOY change 9% YOY change FY 2022 FY 2021 FY 2022 FY 2021 Residential Commercial/Industrial Residential Commercial/Industrial This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on http://finance.austintexas.gov/web/controller/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf 21 Austin Energy Quarterly Financial Report Market and Industry Analysis 22 How the Analysis is Performed Affordability Goal: Competitiveness Metric EIA 861 Database for CY 2001 - 2021 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 23 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 87.4% of the Texas average rate, meeting the Affordability Goal. 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Austin Energy Texas Entities (filtered) ERCOT Source: U.S. Energy Information Administration Form 861, October 2022 24 Affordability Goal: Competitiveness Metric Average Annual Rates by Customer Class for CY 2021 Austin Energy Texas Average 12.17¢ 10.11¢ 7.73¢ 7.86¢ 9.80¢ 8.56¢ Residential Commercial & Industrial System Source: U.S. Energy Information Administration Form 861, October 2022 25 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 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Source: U.S. Energy Information Administration Form 861, October 2022 Austin Energy Texas Entities (filtered) 26 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 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Source: U.S. Energy Information Administration Form 861, October 2022 Austin Energy Texas Entities (filtered) 27 Affordability Goal: Competitiveness Metric System Average Rate for CY 2021 6.50¢ 8.56¢ SOUTHWESTERN PUBLIC SERVICE CO AUSTIN ENERGY CITY OF NEW BRAUNFELS - (TX) CITY OF DENTON - (TX) TXU ENERGY RETAIL CO, LLC TEXAS BLUEBONNET ELECTRIC COOP, INC CITY OF SAN ANTONIO - (TX) RELIANT ENERGY PEDERNALES ELECTRIC COOP, INC EL PASO ELECTRIC CO BROWNSVILLE PUBLIC UTILITIES BOARD AMIGO ENERGY SOUTHWESTERN ELECTRIC POWER CO GREEN MOUNTAIN ENERGY COMPANY Source: U.S. Energy Information Administration Form 861, October 2022 9.40¢ 9.63¢ 9.66¢ 9.80¢ 9.81¢ 10.10¢ 10.11¢ 10.28¢ 10.31¢ 10.32¢ 11.77¢ 12.05¢ 12.40¢ 28 Affordability Goal: Competitiveness Metric Residential Average Rate for CY 2021 AUSTIN ENERGY PEDERNALES ELECTRIC COOP, INC BROWNSVILLE PUBLIC UTILITIES BOARD CITY OF DENTON - (TX) CITY OF NEW BRAUNFELS - (TX) CITY OF SAN ANTONIO - (TX) BLUEBONNET ELECTRIC COOP, INC SOUTHWESTERN PUBLIC SERVICE CO TEXAS AMIGO ENERGY EL PASO ELECTRIC CO GREEN MOUNTAIN ENERGY COMPANY RELIANT ENERGY RETAIL SERVICES TXU ENERGY RETAIL CO, LLC SOUTHWESTERN ELECTRIC POWER CO 10.11¢ 10.57¢ 10.68¢ 10.70¢ 10.89¢ 10.95¢ 11.14¢ 11.91¢ 12.17¢ 12.38¢ 12.99¢ 13.24¢ 14.02¢ 14.58¢ 14.73¢ Source: U.S. Energy Information Administration Form 861, October 2022 29 Affordability Goal: Competitiveness Metric Residential Average Monthly Consumption for CY 2021 EL PASO ELECTRIC CO AUSTIN ENERGY GREEN MOUNTAIN ENERGY COMPANY SOUTHWESTERN PUBLIC SERVICE CO CITY OF DENTON - (TX) RELIANT ENERGY RETAIL SERVICES CITY OF SAN ANTONIO - (TX) BROWNSVILLE PUBLIC UTILITIES BOARD TEXAS TXU ENERGY RETAIL CO, LLC CITY OF NEW BRAUNFELS - (TX) AMIGO ENERGY PEDERNALES ELECTRIC COOP, INC SOUTHWESTERN ELECTRIC POWER CO BLUEBONNET ELECTRIC COOP, INC 665 826 904 951 980 1,037 1,068 1,070 1,105 1,108 1,112 1,117 1,163 1,168 1,190 Source: U.S. Energy Information Administration Form 861, October 2022 30 Affordability Goal: Competitiveness Metric Residential Average Monthly Bill for CY 2021 AUSTIN ENERGY EL PASO ELECTRIC CO CITY OF DENTON - (TX) SOUTHWESTERN PUBLIC SERVICE CO BROWNSVILLE PUBLIC UTILITIES BOARD CITY OF SAN ANTONIO - (TX) GREEN MOUNTAIN ENERGY COMPANY CITY OF NEW BRAUNFELS - (TX) PEDERNALES ELECTRIC COOP, INC BLUEBONNET ELECTRIC COOP, INC TEXAS AMIGO ENERGY RELIANT ENERGY RETAIL SERVICES TXU ENERGY RETAIL CO, LLC SOUTHWESTERN ELECTRIC POWER CO $83.46 $86.34 $104.90 $113.27 $114.34 $116.95 $119.66 $121.07 $122.99 $132.48 $134.41 $138.35 $145.39 $161.49 $172.07 Source: U.S. Energy Information Administration Form 861, October 2022 31 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.