FINANCIAL PLAN PREVIEW FIS CA L YEA R 2019 P RE SE NTED BY Ga ry - - PowerPoint PPT Presentation
FINANCIAL PLAN PREVIEW FIS CA L YEA R 2019 P RE SE NTED BY Ga ry Gold , VP - Accou n ting March 26, 2018 I n f o r m a t i o n a l U p d a t e I n A d v a n c e O f A n A p r i l 3 0 , 2 0 1 8 R e q u e s t F o r A p p r o v a l
I n f o r m a t i o n a l U p d a t e I n A d v a n c e O f A n A p r i l 3 0 , 2 0 1 8 R e q u e s t F o r A p p r o v a l
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CPS Energy has a solid track record of making sound long-term decisions that create value for our customers and community. Over the years we have delivered value through:
– Enhanced customer services – Diversified generation portfolio – Increased renewables – Strong operational performance – Maintained our AA+ credit rating
Fiscal Year 2019 budget:
– Builds on our focus on operational efficiencies, diligent risk management and
– Yet reflects tightening financial metrics compared to Fiscal Year 2018
Management will work continuously during the year to improve our financial performance, as reflected in this financial plan.
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Generation Resource = Load (Demand) + Reserve Margin
WE DEPLOY AN ANNUAL UPDATE PROCESS
5-year detailed planning by business unit Historical & current year performance 25-Year Long Range Plan 1 2 – 5 6 – 25
Year 1 will be presented to Board for approval (outer years are refreshed in subsequent planning cycles, so they are considered preliminary & subject to change) A robust long range planning process is essential for long-term resource planning and yields budget targets, financial metric performance, and revenue support requirements.
$617.2 $1,008.8 $421.5 $159.7 $345.9 $108.4
1a - Operating Expenses- Non Fuel O&M 1b - Operating Expenses- (Fuel, Regulatory Fees) 2 - Debt Requirements from Revenue 3 - R&R 6% of Revenue 4 - City Payment 5 - R&R Remaining Deposit
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* FY 2018 Actual results are unaudited ** Excludes interest during construction and gross of customer contributions
CPS ENERGY’S TOTAL ANNUAL FUNDING REQUIREMENTS = $2,661.5M
FY 2019 Uses of Revenue Total $2,661.5M
Numbered by flow of funds
1a 1b 2 3 5 4
($ millions)
ESMO = Energy Supply & Market Operations EPSC = Energy Supply & Portfolio Committee
Revenue as defined by Bond Ordinance.
annually to provide their approval of the:
budget, for the benefit of our customers.
Budget
($ in millions)
FY 2018 AB FY 2018* FY 2019
Capital (**) $700.0 $558.0 $688.4 Total Non-Fuel O&M $620.2 $581.0 $617.2
Total Uses of Revenue
$2,720.6 $2,624.4 $2,661.5 Historical
2.0% 2.5% 1.5% 2.2% 2.3%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2016 2017 2018 AB 2018* 2019 6
Electric Sales Growth – Driven by local population growth, offset by the continued success of our conservation STEP program.
FY
Fiscal Year 2016 2017 2018 AB 2018* 2019 Electric Customers Residential Customers (YTD Average) 687,431 704,446 714,868 719,838 736,289 Avg Residential Usage (MWh/Cust) 13.8 13.4 13.4 13.4 13.3 Non-Residentail Customers (YTD
Average)
90,664 91,832 92,047 92,753 93,761 Avg Non-Residential Usage (MWh/Cust) 130.1 132.6 137.2 137.6 136.7 Electric Sales TWh 21.9 22.2 22.2 22.4 22.6
* FY 2018 Actual results are unaudited
Historical Budget
0.8% 1.2%
1.0% 1.1%
0.2% 0.6% 1.0% 1.4% 1.8% 2016 2017 2018 AB 2018* 2019 7
Distribution Gas Sales Growth – While customer growth in the short term is comparable to last year, we anticipate a longer term rebound as population levels rise and we pursue a strategy to grow our gas business.
FY
Fiscal Year 2016 2017 2018 AB 2018* 2019 Gas Customers Total Gas Customers (YTD Average) 337,400 341,397 340,921 344,650 348,584 Avg Gas Usage (MCF/Cust) 70.8 64.6 70.6 68.3 70.6 Gas Sales BCf 23.9 22.0 24.1 23.5 24.6
* FY 2018 Actual results are unaudited
Historical Budget
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2016 2017 2018 AB 2018* 2019 Retail Electric Revenue Distribution Gas Revenue Wholesale Electric Revenue Non-Operating Revenue
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$ in millions
FY
$2,514.7 $2,494.1 $2,624.4 $2,661.5 Fiscal Year 2016 2017 2018 AB 2018* 2019 Retail Electric Revenue $2,098.1 $2,138.8 $2,274.8 $2,221.6 $2,263.9 Distribution Gas Revenue 174.4 168.5 210.3 179.8 188.0 Wholesale Electric Revenue 223.4 166.9 214.1 198.9 186.3 Non-Operating Revenue 18.8 19.9 21.4 24.1 23.3 Total Sources Revenues $2,514.7 $2,494.1 $2,720.6 $2,624.4 $2,661.5
* FY 2018 Actual results are unaudited
Historical Budget $2,720.6
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2016 2017 2018 AB 2018* 2019 Operating Expenses Debt Requirements from Revenue City Payment R&R 6% of Revenue R&R Remaining Deposit
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FY
Includes CPS/STP O&M and Fuel /Regulatory items
$ in millions
Fiscal Year 2016 2017 2018 AB 2018* 2019 Operating Expenses $1,484.7 $1,489.7 $1,718.2 $1,587.9 $1,626.0 Debt Requirements from Revenue 379.8 395.1 406.0 397.7 421.5 City Payment 320.5 324.5 350.6 338.4 345.9 R&R 6% of Revenue 150.9 149.6 163.2 157.5 159.7 R&R Remaining Deposit 178.8 135.2 82.6 142.9 108.4 Total Revenues = Costs $2,514.7 $2,494.1 $2,720.6 $2,624.4 $2,661.5
* FY 2018 Actual results are unaudited
Historical Budget $2,514.7 $2,494.1 $2,720.6 $2,624.4 $2,661.5
Total Uses are projected to increase $37.1M, or 1.41%. Additional increases in
expenses will be offset by lower R&R.
$2,263.9 $188.0 $186.3 $23.3 $1,626.0 $421.5 $159.7 $345.9 $108.4
$- $500 $1,000 $1,500 $2,000 $2,500 $3,000
Sources of Revenue Uses of Revenue
FY2019
$2,221.6 $179.8 $198.9 $24.1 $1,587.9 $397.7 $157.5 $338.4 $142.9
$- $500 $1,000 $1,500 $2,000 $2,500 $3,000
Sources of Revenue Uses of Revenue
FY2018*
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$ in millions Revenues must be sufficient to meet the uses of revenues in the flow of funds.
$2,624.4 $2,624.4
* FY 2018 Actual results are unaudited
Uses Sources
$2,661.5 $2,661.5
= =
Fiscal Year 2016 2017 2018 AB 2018* 2019 Non Fuel O&M $570.7 $598.9 $620.2 $581.0 $617.2 Electric Fuel Expense 770.0 741.3 899.9 837.6 829.9 Distribution Gas 75.5 72.8 106.0 83.0 85.0 Regulatory/Other 68.5 76.8 92.1 86.3 93.9 Total $1,484.7 $1,489.7 $1,718.2 $1,587.9 $1,626.0
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FY
$ in millions
Management remains keenly focused on operating cost control.
$1,484.7 $1,489.7 $1,718.2 $1,626.0
* FY 2018 Actual results are unaudited
Historical Budget $1,587.9
The increase in O&M expenses is spread throughout the categories.
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2016 2017 2018 AB 2018* 2019
Electric Fuel Expense Distribution Gas Regulatory/Other Non Fuel O&M
$0 $100 $200 $300 $400 $500 $600 $700 $800 2016 2017 2018 AB 2018* 2019
Financial & Other Security & Safety Office Legal & Administrative Office Customer Engagement Office EIT Operations Office
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FY
$ in millions
* FY 2018 Actual results are unaudited
Fiscal Year 2016 2017 2018 AB 2018* 2019 Customer Engagement Office $5.5 $6.8 $13.2 $12.6 $18.5 Operations Office $492.4 $537.4 $538.4 $469.5 $530.0 Distribution & Transmission
260.8 307.0 286.7 284.5 294.9
Power Generation
139.1 113.0 140.9 80.7 100.0
Gas, CDP & ESMO
92.5 117.3 110.7 104.3 89.6
JBSA
45.5
EIT 78.5 48.5 66.4 35.3 45.1 Legal & Administrative Office 13.9 45.7 54.6 20.7 71.2 Security & Safety Office 24.0 19.9 13.3 21.2 18.6 Financial & Other 1.6 2.1 14.2
5.1 CPS Energy Total (Excluding AFUDC) $615.9 $660.4 $700.0 $558.0 $688.4
$615.9 $660.4 $558.0 $688.4 Historical Budget $700.0
44.6% 49.5% 68.4% 62.8% 50.6% 55.4% 50.5% 31.6% 37.2% 49.4% $0 $100 $200 $300 $400 $500 $600 $700 $800 2016 2017 2018 AB 2018* 2019 Funded with Debt Funded with Cash and CIAC
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FY
Over time balanced Debt & Cash Funding for the capital program is essential for achieving the goal of reducing the Debt to Capitalization ratio below 60%. $ in millions
(Excluding AFUDC) Fiscal Year 2016 2017 2018 AB 2018* 2019 Funded with Debt $274.8 $326.9 $478.8 $350.4 $348.1 Funded with Cash and CIAC $341.1 $333.5 $221.2 $207.6 $340.3 Gross Construction Total $615.9 $660.4 $700.0 $558.0 $688.4
* FY 2018 Actual results are unaudited
Historical Budget $615.9 $660.4 $558.0 $688.4 $700.0
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Management’s approved budget in FY 2018 was outperformed as a result of strong
Fiscal Year 2016 2017 2018 AB 2018* 2019 Adjusted Debt Service Coverage (> = 1.5 target) 1.87 1.72 1.61 1.76 1.64 Days Cash on Hand (> = 150 Days) 203 197 172 211 199 Debt / Capitalization (< = 60%) 63.7% 62.2% 62.8% 61.8% 62.2%
* FY 2018 Actual results are unaudited
Historical Budget
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The FY 2019 year proposed budget will support our People First focus that will benefit our community and meet our commitments, including:
Maintaining and strengthening key financial metrics will remain an important focus for management during FY 2019. Approval of this budget will be requested in April. We remain readily available to answer questions on this information.
($ in millions)
FY 2019
Capital $688.4 Total Non-Fuel O&M $617.2
Total Uses of Revenue
$2,661.5
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AFUDC (Allowance for Funds Used During Construction): A cost accounting procedure whereby interest on the debt used to finance construction is added to the cost of the asset being constructed. Also referred to as capitalized interest. Capital Asset: An asset with a life of more than one year that is not bought and sold in the ordinary course of business. CIAC: CIAC stands for Contributions in Aid of Construction and is a funding source for the capital program. Days Cash on Hand: An estimate of the number of days of operating expenses that a company could pay with its current cash available. Debt Service Coverage Ratio: The amount of revenues available to meet annual interest and principal payments
Depreciation: The amount allocated during the period to expense the cost of acquiring a capital asset over the useful life of the asset. GASB (Governmental Accounting Standards Board): The authoritative standard-setting body for accounting and financial reporting for governmental entities in the United States. GASB Statement No. 68: An accounting pronouncement issued by the Governmental Accounting Standards Board (“GASB”) that provides revised regulatory requirements for accounting for pension expense and obligations. O&M: Operating and Maintenance expenses. AB: Approved Budget.
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(EII) - Construction Service Improvements (EII) - Customer Service Enhancements (EII) - Grid Optimization (EII) - Gas Supply Line Replacement JBSA SA Public Radio System Cable Rehabilitation New Overhead Feeder Circuits LED Streetlight Replacements Pole Replacements Transmission Line and Substation Rebuilds Civic Improvement Projects Spruce 2 Generator Coal Yard Upgrades Energy Storage (Battery) Real Estate Master Plan