MWRA Fiscal Year 2020 Proposed Current Expense Budget March 21, - - PowerPoint PPT Presentation

Massachusetts Water Resources Authority

MWRA Fiscal Year 2020 Proposed Current Expense Budget

March 21, 2019

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FY20 Proposed CEB

Rates Management Strategy Sustainable and Predictable Assessments Multi-Year Approach

• Capital Finance Expenses
• Existing Expenses and Revenue – Inflation, Changes
• Long-Term Liabilities

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Budget Drivers For Multi-Year Planning

Historical Budgeted Spending

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$50.7 $248.8 $497.6 $797.0 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 $ s in millions Total Indirect Costs Total Direct Costs Total Capital Finance Costs Total Operating Costs

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Defeasance Strategy

$300,000,000 $350,000,000 $400,000,000 $450,000,000 $500,000,000 $550,000,000 $600,000,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Debt Service Budget Fiscal Year

Before and After Defeasance

Before Defeasance After Defeasance

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Expense Changes - HEEC

FY19 FY20 FY21 FY22 FY23 FY24 Projected HEEC Expense

Net of $6.5 reserve

$1.4 $4.4 $5.2 $6.3 $6.4 $6.7

Amounts in millions

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Long-Term Liabilities

Pension Funding Schedule FY19 FY20 FY21 FY22 FY23 FY24 $7.0 $7.3 $7.6 $8.0 $8.3 $8.7 OPEB Funding Schedule FY19 FY20 FY21 FY22 FY23 FY24 $5.6 $6.0 $6.1 $6.1 $6.2 $6.2

Amounts in millions

CEB Budget Structure

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• Direct Expenses
• Indirect Expenses
• Capital Finance Expenses
• Non-Rate Revenue
• Rate Revenue

FY20 Proposed Current Expense Budget (CEB)

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Direct Expense $248.8 31% Indirect Expense $50.7 6% Capital Financing $497.6 63%

FY20 Proposed Current Expense Budget

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CEB Budget Highlights – Direct Expenses

Wages, Salaries, Overtime & Fringe Benefits $139.7 56% Maintenance $32.8 13% Energy & Utilities $24.2 10% Chemicals $12.1 5% Other $39.9 16%

Direct Expenses

($s in millions)

• Wages, Salaries, Overtime

& Fringe Benefits: Reflects collective bargaining and tunnel redundancy staff

• Chemicals: $1.2M increase
• Utilities: $1.3M increase
• Maintenance: $.5M

increase

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Chemicals

$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Proposed

$s in millions

Historical & Projected Chemical Cost

Sodium Hypochlorite Ferric Chloride Activated Carbon

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Utilities

Electricity Diesel Fuel

$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $/gal

$/gal

$0.090 $0.095 $0.100 $0.105 $0.110 $0.115 $0.120 $0.125

$ per kWh

$/kWh

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Health Insurance

$15.1 $15.2 $15.1 $15.7 $15.8 $16.5 $17.5 $18.6 $18.9 $19.0 $0 $4 $8 $12 $16 $20 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

$s in millions

Health Insurance FY11-FY20

CEB Budget Structure – Indirect Expenses

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Watershed/PILOT $27.2 54% Retirement Funding $7.3 14% OPEB Funding $6.0 12% HEEC Payment $4.4 9% Insurance $2.1 4% Other $3.7 7%

Indirect Expenses

($s in millions)

• Pension Fund: 95% funded
• OPEB Contribution: 50% of

Actuarially Determined Contribution

• HEEC Cable: New cable coming
• nline in FY20
• Watershed & PILOT: $0.79m

increase

CEB Budget Structure – Capital Finance Expenses

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• Variable Rate Debt

Assumption: 3.75%, 25 bp increase

• Assumes $15.0M

defeasance in FY19

• $1M increase to Current

Revenue for Capital

• $4.9 prepayment of debt

Senior Debt, $204.7 Subordinate Debt, $170.6 State Revolving Fund, $93.1 Other, $29.1

Capital Financing

($s in millions)

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Interest Rates

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% July-10 July-11 July-12 July-13 July-14 July-15 July-16 July-17 July-18

MWRA All-In Cost of Variable Rate Debt

FY20 Non-Rate Revenue

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• Investment Income: Short-term

assumption increasing 50 bp from 1.75% to 2.25%

• Other revenue: Reduction due

to demand response and RPS programs

• Other User Charges: Reduction

related to Entrance Fees and Water Treatment Residuals

Other User Charges $9.2 30% Other Revenue $5.6 19% Investment Income $15.5 51%

Non-Rate Revenue

($s in millions)

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Actual and Forecasted Rate Revenue Changes

3.5% 3.4% 3.4% 3.3% 3.2% 3.1% 3.7% 3.6% 3.5% 3.3% 3.3% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24

MWRA Combined Utilities Historical and Projected Rate Revenue Changes

Actual Projected

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Actual and Forecasted Rate Revenue Changes by Utility

3.7% 3.5% 7.7% 3.5% 3.5% 3.1% 3.7% 3.6% 3.5% 3.9% 3.9% 3.4% 3.4% 1.4% 3.3% 3.0% 3.1% 3.7% 3.6% 3.5% 2.9% 2.9%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24

MWRA Water & Sewer Utilities Historical and Projected Rate Revenue Changes

Water Utility Sewer Utility

Actual Projected

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FY20 Current Expense Budget Next Steps

• Transmit Proposed Budget to Advisory Board for 60 day

review (review and briefings in process)

• Public Hearing
• MWRA Board Hearing
• Staff will present Draft Final Budget in May
• Staff anticipate FY20 Budget adoption in June

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Thank You