Item 14- Presentation: Austin Energy FY27 Forecast — original pdf

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Austin Energy Five-Year Financial Forecast FY2027 – FY2031 John Davis Acting Sr. Vice President & Chief Financial Officer May 11, 2026 © Austin Energy Item 14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 Financial Overview & Five-Year Forecast Forecast and Budget Timeline Progress Addressing Challenges Financial Forecast Key Performance Indicators 3 Forecast/Budget Timeline Remaining Budget Process 1/15/2026 City of Austin Budget kickoff 4/16/2026 City Manager presented Five-Year Forecast to City Council 7/16/2026 City Manager presents City of Austin Budget to City Council 7/22/2026 City Council Budget Work Sessions begin Budget Work Sessions 5/11/2026 EUC meeting “You are here” 2/27/2026 Austin Energy submitted Five-Year Forecast to City of Austin Budget Office 7/20/2026 EUC meeting – Proposed Budget presentation 6/5/2026 Austin Energy submits FY2027-FY2028 Capital Improvement Plan (CIP) as well as O&M Budget to City of Austin Budget Office 8/12-14/2026 City Council Budget Readings 4 Challenges Remain but Positive Trend Sustain path with future base rate increases Structurally Imbalanced Rates As anticipated, revenues under current rates are insufficient to cover rising costs and achieve financial policies without future base rate increases. Inflation Drives Costs Higher Inflation in the electrical sector persists and is far higher than overall inflation. O&M increases outpace revenues from rates. System Investments Are Required Higher capital investment required to meet near-term and long-term needs and base rates will need to be adjusted to address this investment in our system. 5 Austin Energy’s Costs Continue to Increase 200% 150% 100% 50% 0% e s a e r c n I % e v i t a u m u C l 194% 164% 111% 21% 10% 2021 2022 2023 2024 2025 Service Transformers (pad and pole) URD residential conductor Base-rate increases Station Transformers (power and auto) Inflation (CPI-urban, USA) 6 Financial Forecast Overview FY27 – FY31 • 5% Base Rate increase in FY27 – FY31 • Balance liquidity and leverage while managing cost increases • Avoiding rate shock 7 Austin Energy Capital Improvement Plan ($ millions) Budget FY26 Forecast FY27 Forecast FY28 Forecast FY29 Forecast FY30 Forecast FY31 5-Year Total Distribution $158.8 $143.9 $162.4 $141.5 $164.1 $192.3 $804.2 Distribution Substation Transmission 18.4 108.4 49.9 90.0 39.1 27.7 104.1 134.4 29.3 115.1 29.9 116.8 175.9 560.4 Electric Service Delivery $285.6 $283.8 $305.6 $303.6 $308.5 $339.0 $1,540.5 Power Production $36.2 $31.2 $19.8 $16.3 Joint Projects District Cooling General 19.4 31.8 49.5 16.3 20.0 31.6 20.9 13.0 5.9 19.1 13.0 2.4 $10.8 16.2 8.0 2.7 $11.0 $89.1 18.2 8.2 2.7 90.7 62.2 45.3 Total $422.4 $382.9 $365.2 $354.4 $346.2 $379.1 $1,827.8 8 Austin Energy Forecasted Fund Summary ($ millions) FY26 Budget FY27 FY28 FY29 FY30 FY31 Beginning Balance $201.2 $157.6 $156.9 $161.9 $167.0 $176.5 Revenues/Transfers In 1,951.3 2,033.0 2,142.2 2,242.3 2,342.8 2,445.8 Requirements: Operating Expenses Power Supply Debt Service CIP (Cash Transfer) General Fund Transfer Support Transfers AE Reserve Transfers 933.3 527.7 195.2 123.5 139.0 76.2 0.0 953.8 531.0 203.1 120.2 146.0 79.7 0.0 1,004.6 1,048.9 1,062.3 1,116.9 551.1 230.3 70.3 149.0 83.8 48.0 567.1 238.2 62.8 155.0 88.2 77.0 582.9 249.3 61.0 158.0 92.8 127.0 599.3 257.9 93.4 167.0 97.7 14.0 Total Requirements $1,994.9 $2,033.8 $2,137.1 $2,237.2 $2,333.3 $2,346.2 Working Capital Ending Balance (43.5) $157.6 (0.8) 5.0 5.1 9.5 99.6 $156.9 $161.9 $167.0 $176.5 $276.0 9 Key Performance Indicators Target Projected FY26 Forecast FY27 Forecast FY28 Forecast FY29 Forecast FY30 Forecast FY31 10% 10% 12% 13% 15% 17% 17% 200 Days 183 Days 155 Days 159 Days 167 Days 190 Days 201 Days ≥2.5 2.2 2.3 2.2 2.3 2.5 2.5 Operating Margin Days Cash on Hand Debt Service Coverage Debt to Capital < 50% 58% 58% 58% 58% 57% 56% 10 Key Performance Indicators: Comparison FY26 – FY31 Target 5 YR Forecast Operating Margin Days Cash on Hand Debt Service Coverage 10% 200 Days ≥2.5 Debt to Capital < 50% 2026 2027 2026 2027 2026 2027 2026 2027 FY26 10% 10% FY27 FY28 FY29 FY30 FY31 13% 12% 16% 13% 17% 15% 20% 17% 149 Days 154 Days 169 Days 186 Days 225 Days N/A 17% N/A 183 Days 155 Days 159 Days 167 Days 190 Days 201 Days 2.2 2.2 57% 58% 2.3 2.3 57% 58% 2.4 2.2 56% 58% 2.4 2.3 55% 58% 2.8 2.5 53% 57% N/A 2.5 N/A 56% 11 Next Steps The Five-Year Financial Forecast is a preliminary planning step in the annual budget process Austin Energy Budget City Manager’s Budget Presentation to EUC June 5 – Austin Energy submits FY2027-FY2028 Budget to City of Austin Budget Office July 16 – City Manager presents City of Austin Budget to City Council July 20 – Austin Energy presents budget to Electric Utility Commission (EUC) 12 Customer Driven. 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