Item 11- FY 2024/25 Austin Energy Budget Briefing — original pdf

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Austin Energy FY 2025 Proposed Budget Electric Utility Commission John Davis Director, Budget & Financial Compliance 7/15/2024 © 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 City of Austin’s audited Annual Comprehensive Financial Reports. 2 Agenda • Overview and Highlights • Financial Health • Typical Ratepayer Impact 3 FY 2025 Proposed Budget Presentation Overview and Highlights 4 FY 2025 Austin Energy Revenue ($ millions) FY 2025 Total Austin Energy Revenue FY 2025 Revenue Drivers Regulatory Revenue $197.4 Transmission Revenue $108.8 Community Benefit Revenue $95.5 Interest Income $37.5 Other Revenue $129.8 $1.86B • • • Increase Base Rate revenue due two percent base rate increase - $13.8M Increase Community Benefit revenue primarily due to increases in Customer Assistance Program recovery - $12.1M Increase Regulatory and Transmission revenue due to rising costs in the Electric Reliability Council of Texas (ERCOT) market - $48.2M • Change in other revenues including projected Winter Storm Mara FEMA reimbursement, interest revenue, and miscellaneous revenue - $32.0M • Decrease in Power Supply revenue due to forecasted decrease in Power Supply costs - ($34.4M) Power Supply Revenue $575.9 Base Revenue $710.7 5 FY 2025 Austin Energy Requirements ($ millions) Transmission & ERCOT $206.3 FY 2025 Total Austin Energy Budget City General Fund Transfer $125.0 Debt Service $175.7 City Direct Transfers / Other $92.2 Joint Projects $111.0 CIP Transfer $98.4 $1.86B FY 2025 Operating & Maintenance Expense (O&M) Breakout Personnel $323.1 $532.3M Power Supply $514.5 O&M $532.3 Contractuals $191.3 Commodities $17.9 6 FY 2025 Expense Drivers • • • • Increase in Austin Energy's share of operating costs for the South Texas Nuclear Plant (STP) and Fayette Power Project (FPP) - $17.4M Increase to employee salary and fringe cost - $13.8M Increase vegetation management funding to account for increased contracted labor rates and vegetation management cycle goals - $9.0M Increase transmission expense due to rising costs in the Electric Reliability Council of Texas (ERCOT) market - $7.8M • Call center contractor cost increases; includes living wage increase and staffing levels to maintain service levels for City of Austin utility customers - $3.2M • • • Increase Customer Energy Solutions conservation rebates and incentives, energy efficiency service programs, and electric vehicle programs - $2.0M Increase for Altec vehicle leases for bucket trucks and other heavy-duty equipment - $3.8M Increase to City General Fund Transfer - $10M • Transfer to City - Direct & Indirect services - $8.1M 7 FY 2025 Austin Energy Fund Summary ($millions) Beginning Balance Revenue/Transfers In Expenditures Operating Expenses (1) Power Supply Expenses Debt Service Capital Improvement Plan (Cash Funded) General Fund Transfer Other Transfers to City & Requirements Total Expenditures Excess (Deficiency) Ending Balance (Adjusted) FTEs FY 2023 Actual 235.1 1,900.6 793.6 633.6 169.4 66.5 105.0 69.2 1,837.3 63.3 285.0 1,897 FY 2025 ▲ from FY 2024 Estimated to FY 2025 Proposed FY 2024 Estimated 285.0 1,782.8 Proposed 285.9 1,855.6 .9 72.8 72.2 (35.2) 1.9 16.5 10.0 8.1 73.5 (.8) .2 10 .1% 4.1% 9.3% (6.4%) 1.1% 20.1% 8.7% 9.6% 4.1% (80.0%) .1% 777.3 549.7 173.9 81.9 115.0 84.1 1,781.9 1.0 285.9 1,924 849.5 514.5 175.8 98.4 125.0 92.2 1,855.4 0.2 286.1 1,934 (2) (1) Includes expenses for O&M, Joint Projects, and Transmission & ERCOT. (2) FTE total includes a deduction for 11 real estate FTEs moved from Austin Energy to City of Austin Financial Services Department to consolidate City real estate services (Funded by AE) and 1 FTE moved to City of Austin Management Services. 8 FY 2025 New Full-time Employees (FTEs) Program New FTEs Annual Cost Annual Savings (Conversion Offset) Annual Net Cost Customer Energy Solutions Corporate Services Electric System Engineering & Tech Electric System Field Operations Regulatory & Government Affairs Technology & Data Total 1 2 5 3 1 10 22 $139,000 $216,008 $665,746 $375,720 $156,761 $(160,000) $(108,574) $(926,000) - $(129,891) $(21,000) $107,433 $(260,254) $375,720 $26,870 $1,440,621 $2,993,856 $(1,952,500) $(511,879) $(3,276,965) $(283,111) 11 real estate FTEs moved from Austin Energy to City of Austin Financial Services Department to consolidate City real estate services (Funded by AE). 1 FTE moved to City of Austin Management Services. 9 Capital Improvement Program (CIP) 5-Year Spend Plan ($ millions) Business Unit FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Distribution 105.9 159.1 141.5 119.5 FY 2024 Approved 15.4 56.9 29.4 18.7 36.3 Distribution Substation Transmission* Power Production District Cooling* General Total Electric Service Delivery 178.2 242.0 240.1 26.8 56.1 47.7 25.8 86.3 22.8 75.8 42.6 5.0 16.3 17.3 71.4 208.1 29.6 4.0 7.9 106.6 10.1 75.6 192.3 24.6 3.0 4.8 96.9 7.0 64.1 168.0 21.8 3.0 4.5 * Recovery of capital expenditures is not a component of electric retail rates 262.7 401.8 303.9 249.6 224.8 197.3 1,377.5 FY 25-29 Total 623.6 84.0 342.9 1,050.5 166.4 40.8 119.8 10 FY 2025 CIP Highlights Distribution Power Production • Higher materials/labor costs and continued growth, downtown network projects, including Brazos Duct Bank, East Ave Duct Bank, and Hwy 620 relocation project $19.3M in FY 2025 • Distribution System Resilience Program - $50M over 5 years of which $10M is in 2025 General • Hot section work at Sand Hill, Decker Dam improvements and Fallwell Lane work $14.9M in FY 2025 • Austin Energy Field Service Center (Cameron Road) - $52M in FY 2025 Transmission and Distribution Substation • Brackenridge Substation rebuild of 1975 substation $45.5M of which $9.8M in FY 2025 • Timber Creak Substation – new substation to serve Austin-Bergstrom Airport expansion and growing load in SE Austin $29.2M of which $5.1M in FY 2025 11 FY 2025 Proposed Budget Presentation Financial Health 12 Forecasted Key Financial Metrics Summary Minimum or Target CYE FY2024 Proposed FY2025 Forecast FY2026 Forecast FY2027 Forecast FY2028 Forecast FY2029 Operating Margin 12% 12% 11% 15% 14% 14% Net Income (Millions of $) Quick Ratio 10% > $0 > 1.5 $39.8 $56.1 $37.0 $64.7 $42.7 $49.4 2.5 2.4 2.3 2.3 2.2 Days Cash on Hand 150 Days 133 Days 130 Days 138 Days 143 Days 154 Days Debt Service Coverage > 2.0 Debt to Capital < 50% GFT (Millions of $) $115 $125 2.4 56% 2.0 56% $133 2.2 56% $140 2.1 55% $147 2.2 54% $152 2.6 126 Days 2.3 56% 13 FY 2025 Proposed Budget Presentation Customer Bill Impact & Rate Comparison 14 Typical Residential Customer Bill Impact FY 2024 bill based on current rates / FY 2025 bill based on proposed rates (Inside City of Austin) Customer Average Monthly Bill FY 2024 FY 2025 $ Change % Change Base Rates Power Supply Adjustment (PSA) Service Area Lighting (CBC) Energy Efficiency Services (CBC) Customer Assistance Program (CBC) Regulatory Charge Total Monthly Bill Total CAP Customer Discounted Bill Energy (kWh) 860 860 860 860 860 860 860 860 $54.90 $45.77 $1.69 $3.00 $2.08 $11.82 $56.09 $45.77 $1.77 $3.00 $1.19 $0.00 $0.08 $0.00 $3.82 $1.74 $11.51 ($0.31) 2% 0% 5% 0% 84% (3%) $119.26 $121.96 $2.70 2% $92.86 $92.83 ($0.03) -0.03% Note: The FY 2024 PSA is based on the current rates, including PSA administrative updates through March 2024. 15 Residential Monthly Bills $138 $122 $153 $150 $125 l l i B y l h t n o M $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Austin Energy San Antonio PEC Bluebonnet Georgetown Note: Surrounding utility average consumption data based on CY2022 EIA data and current rates; Austin Energy bill based on 860 kWh at proposed FY 2025 budget rates. 16 ©Austin Energy. 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