Item 10- Staff Briefing: FY2026/27 Austin Energy Budget — original pdf

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FY 2027 Proposed Budget Electric Utility Commission John Davis, CPA, MBA Director, Austin Energy Finance 07/20/2026 © Austin Energy Item 10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 2027 Annual Budget Overview + Highlights Financial Health Customer Impact 3 Overview and Highlights FY 2027 Austin Energy Revenue ($ millions) FY 2027 Sources Drivers • • • • • Increase Base Rate revenue due primarily to five percent base rate increase $40M, Customer growth and load growth $21M: Total $61.6M Increase Power Supply revenue: $8.4M Increase Regulatory revenue due to rising costs in the Electric Reliability Council of Texas (ERCOT) market: $22.7M Increase Transmission revenue based on increased ERCOT demand: $1.5M Increase in Other Revenue driven by Production Tax Credit: $13.6M FY 2027 Total Austin Energy Revenue Sources Power Supply Revenue $601.3 Regulatory Revenue $266.8 $2.06B Community Benefit Revenue $126.4 Transmission Revenue $117.7 Other Revenue $90.4 Interest Income $41.5 Base Revenue $810.8 5 FY 2027 Austin Energy Costs ($ millions) Other City Transfers $94.2 General Fund Transfer $147.0 Debt Service $237.3 Transmission & ERCOT $234.8 Joint Projects $105.2 CIP Transfer $88.7 O&M $619.3 FY 2027 Operating & Maintenance Expense (O&M) Breakout $2.06B $619.3M Personnel $359.2 Power Supply $531.0 Contractuals $237.8 Commodities $22.4 6 FY 2027 Cost Drivers • • • Increase to employee salary and benefit cost including cost of living adjustment: $19.1M Increase transmission expense due to rising costs in Electric Reliability Council of Texas (ERCOT) market: $17.1M Increase to pole inspections & remediation cost: $3.5M • Call center contractor cost increase anticipated due to living-wage requirements and cost-of-living adjustments in the new staffing contract: $2.2M • Increase Customer Energy Solutions conservation rebates and incentives, energy efficiency service programs, and electric vehicle programs: $1.2M • Decrease in call center cost due to pilot program efficiencies: $1.3M • Decrease in Power Production operating cost: $12.3M Transfers and Other: • Decrease in CIP cash transfer: $34.8M • • • • Increase in debt service cost: $42.3M Increase to City General Fund Transfer: $8.0M Increase in Contingency Reserve Fund: $8.0M Increase in transfer for City services: $8.9M 7 Capital Improvement Program (CIP) 5-Year Spend Plan ($ millions) Business Unit FY 2026 Approved FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 Distribution Distribution Substation 158.8 147.7 153.5 155.5 147.1 147.3 18.4 27.1 34.5 22.4 22.6 13.5 Transmission 108.4 110.6 122.2 135.7 140.0 137.9 FY 2027– 2031 Total 751.1 120.1 646.3 Electric System Subtotal Power Production District Cooling* General Total 285.5 285.4 310.1 313.5 309.7 298.7 1,517.5 55.6 31.8 49.5 636.6 338.1 270.9 224.3 25.6 59.1 22.6 23.8 3.0 16.3 3.0 12.2 90.6 3.0 11.8 1,560.4 57.2 123.2 422.4 1,006.6 694.6 603.8 549.2 404.1 3,258.3 * District Cooling expenditures are not a component of electric retail rates 8 FY 2027 CIP Highlights Distribution • Distribution spend impacted by higher materials/labor costs and continued growth • Brazos Duct Bank, East Ave Duct Bank, Dunlap New Feeders, and Hidden Valley New Feeder projects: $10.3M FY 2027 spend plan • Distribution reliability investments: $14.7M FY 2027 spend plan Transmission and Distribution Substation • Brackenridge Substation - rebuild of 1975 substation: $10.9M FY 2027 spend plan • Bolm Substation – new substation to serve growth in the area of 183 and Levander Loop and to serve a TxDOT pump station: $16.5M FY 2027 spend plan • Lytton Springs Improvements – equipment upgrades and additions to support 138kV transmission system load increases and mitigate congestion: $3.9M FY 2027 spend plan District Cooling • DCP1 Condenser Water System Replacement: $5.1M FY 2027 spend plan Power Production • Improvements at Decker Creek Power Station and Sand Hill Energy Center: $25.3M FY 2027 spend plan 9 FY 2027 Personnel Requirements 27 Contract Conversions & 2 New FTEs Program FTEs Annual Cost Annual Savings (Conversion Offset) Annual Net Cost Job Responsibility Corporate Communications Customer Account Management Customer Energy Solutions 2 5 3 $241,532 ($175,928) $65,604 Resource Generation Plan Support $585,752 ($587,200) ($1,448) Reliability & Customer Support $387,144 ($283,361) $103,783 Electric System Engineering & Technical 13 $1,892,109 ($1,417,798) $474,311 Electric System Field Operations Finance & Corporate Services Technology & Data 4 1 1 $488,084 ($401,929) $86,155 $123,863 ($25,190) $98,673 Financial Health $145,455 ($360,000) ($214,545) Reliability and Resiliency Resource Generation Plan / Battery Program Reliability and Resiliency / Development Services Reliability and Resiliency / Development Services Totals 29 $3,863,939 ($3,251,405) $612,534 10 Financial Health Forecast Fund Summary ($ in millions) 5% Base Rate Increase in FY2027 - FY2031 Beginning Balance Revenues/Transfers In Requirements: Operating Expenses Power Supply Expenses Debt Service CIP (Cash Transfer) General Fund Transfer Support Transfers AE Reserve Transfers FY2026 Amended Budget $201.2 1,951.3 933.3 527.7 195.2 123.5 139.0 76.2 0.0 FY2026 CYE $185.2 1,973.2 932.5 527.7 193.7 123.5 139.0 76.2 0.0 FY2027 Proposed FY2028 Forecast FY2029 Forecast FY2030 Forecast FY2031 Forecast $165.8 2,059.7 $168.0 2,180.3 $170.3 2,315.4 $173.1 2,341.3 $176.0 2,471.6 960.3 531.0 237.4 88.7 147.0 85.1 8.0 1,023.8 1,080.7 1,105.4 1,178.2 551.1 276.1 79.7 151.0 93.3 3.0 567.1 305.7 84.1 158.0 96.0 21.0 486.8 330.3 72.9 162.0 101.0 80.0 498.8 347.4 79.5 174.0 106.3 85.0 Total Requirements $1,994.9 $1,992.6 $2,057.5 $2,178.0 $2,312.6 $2,338.4 $2,469.2 Working Capital excess / (deficiency) Ending Balance FTEs (43.5) $157.6 1,965 (19.4) $165.8 1,965 2.2 2.3 2.7 $168.0 1,963 $170.3 1,983 $173.1 2,003 3.0 $176.0 2,023 2.4 $178.4 2,043 12 Forecasted Key Financial Metrics Summary Minimum or Target Projected FY2026 Proposed FY2027 Forecast FY2028 Forecast FY2029 Forecast FY2030 Forecast FY2031 Operating Margin 10% 11% 12% 13% 15% 18% 18% Days Cash on Hand 150 Days 187 Days 161 Days 157 Days 153 Days 175 Days 180 Days Debt Service Coverage > 2.5 Debt to Capital < 50% 2.3 58% 2.1 1.9 1.9 2.0 2.0 63% 65% 67% 67% 67% GFT (Millions of $) N/A $139 $147 $151 $158 $162 $174 13 Customer Bill Impact & Rate Comparison Typical Residential Customer Bill Average Monthly Bill Energy (kWh) FY2025 FY 2026 FY 2027 Base Rates Power Supply Adjustment (PSA)* Regulatory Charge* Service Area Lighting (CBC)* Energy Efficiency Services (CBC)* Customer Assistance Program (CBC)* Total Monthly Bill Total CAP Customer Discounted Bill * Pass-through rates 860 860 860 860 860 860 860 860 $56.09 $45.77 $11.51 $1.77 $3.00 $3.82 $59.19 $35.41 $11.51 $2.18 $3.93 $4.85 $62.18 $33.64 $15.47 $2.34 $3.53 $3.57 $121.96 $117.07 $120.73 $92.83 $86.15 $89.83 $ Change (FY2026 to FY2027) $2.99 -$1.77 $3.96 $0.16 -$0.40 -$1.28 $3.66 $3.68 15 Residential Monthly Bills Compared l l i B y l h t n o M $160 $140 $120 $100 $80 $60 $40 $20 $0 16 $142 $152 $137 $127 $121 Austin Energy San Antonio PEC Bluebonnet Georgetown Note: Surrounding utility average consumption data based on CY2024 EIA data and current (July 2026) rates; Austin Energy bill based on 860 kWh at proposed FY 2027 budget rates. ©Austin Energy. 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