Strategic stewardship of the Water Authority’s financial resources enables the agency to perform its core function of delivering a safe and reliable water supply and to embrace its core characteristics – pioneering, visionary, agile and driven. By adopting a two-year budget, the Board of Directors emphasized a continued focus on innovation and efficiencies. At the same time, the Board adopted some of the smallest rate increases in the past decade, maintaining its commitment to delivering safe water at a reasonable cost.
The Board of Directors in June adopted a two-year, $1.58 billion budget for fiscal years 2018 and 2019. More than 90 percent of the budget was for water purchases and treatment, along with building and financing infrastructure. Projected cost increases for buying and treating water were largely offset by decreases in the Capital Improvement Program and stored water purchases; the budget projected that no stored water purchases would be necessary following the filling of the expanded San Vicente Reservoir. The budget focused on extending the useful life of facilities through careful asset management; safeguarding physical and cyber assets through improved infrastructure and technology security; developing balanced long-term water-use efficiency regulations; and implementing innovations to advance supply reliability, offset costs, and create more efficient agency operations.
By moderating upward pressure on water rates, the Board of Directors in June adopted rate increases for calendar year 2018 that were among the smallest in the past decade. Rate increases of 3.7 percent for both untreated and treated water accounted for higher rates and charges from the Metropolitan Water District of Southern California; a scheduled increase in water deliveries from the Water Authority’s independent and highly reliable Colorado River transfers; slightly higher projected water sales; and slight price increases for water from the Claude “Bud” Lewis Carlsbad Desalination Plant and the Colorado River. To minimize the effect of those factors, the Water Authority restructured its debt portfolio during the 2016-2017 budget cycle to reduce debt service payments by $78.3 million over the life of the refinanced bonds.
A new era of low-cost power started in September when the Water Authority executed a contract that will help control energy costs for the region’s water ratepayers. The contract, authorized by the Water Authority Board of Directors in July, allows the Water Authority to purchase power at wholesale rates through the Western Area Power Administration. The Water Authority will initially sell its power from Western – which markets and delivers power from Hoover Dam in Boulder Canyon on the Colorado River – to the California Independent System Operator, which manages most of California’s large-scale power grid. Over time, the Water Authority plans to develop a way for Boulder Canyon power to be delivered directly to agency facilities or the Carlsbad desalination plant, which could reduce power costs by up to $300,000 a year.
The Water Authority ended the year with an excellent safety record that was nearly four times better than the industry average, indicating that the Water Authority had fewer work-related injuries and illnesses than most peer agencies. The Water Authority also maintains a workers’ compensation “experience modifier” that is significantly below the industry standard, and it completed the fiscal year without a single property claim. The figures not only reflect the Water Authority’s commitment to workplace safety and risk management, they translate into savings on insurance premiums – a benefit for ratepayers.
Water Authority Headquarters
Statements of Revenues, Expenses, and Changes in Net Position
For the Fiscal Years Ended June 30, 2017 and 2016
2017 2016 Operating Revenues Water Sales 579,057,028 524,934,642 Other revenues 3,727,332 3,240,007 Total Operating Revenues 582,784,360 528,174,649 Operating expenses Cost of sales 430,560,992 387,123,145 Operations and maintenance 19,097,518 18,212,388 Planning 9,040,200 8,651,233 General and administrative 14,487,899 14,259,469 Depreciation and amortization 62,014,987 59,493,116 Total Operating Expenses 535,201,596 487,739,351 Operating Income 47,582,764 40,435,298 Nonoperating revenues (expenses) Property taxes and in-lieu charges 12,913,313 12,067,223 Infrastructure access charges 31,144,704 30,434,370 Investment income 2,237,947 5,985,490 Other income 11,408,632 13,664,392 Intergovernmental 11,452,308 12,213,866 Gain (Loss) on sale/retirement of capital assets (727,294) 27,580 Interest expense (95,533,730) (85,112,986) Debt issuance costs (352,544) (6,381,194) Other expenses (17,143,705) (10,557,021) Total nonoperating revenues (expenses) (44,600,369) (27,658,280) Income before capital contributions 2,982,395 12,777,018 Capital contributions Capacity charges 21,080,540 15,838,800 Water standby availability charges 11,091,285 11,088,377 Contributions in aid of capital assets 219,325 791,486 Total capital contributions 32,391,150 27,718,663 Changes in net position 35,373,545 40,495,681 Net position at beginning of year, as restated 1,535,174,603 1,496,572,700 Net position at end of year 1,570,548,148 1,537,068,381
Statements of Net Position
June 30, 2017 and 2016
2017 2016 Assets Current Assets Cash and investments $56,840,335 $75,806,910 Restricted cash and investments 149,126,977 162,359,461 Water receivables 102,593,505 99,959,059 Interest receivable 918,016 1,054,733 Taxes receivable 1,153,812 1,198,883 Other receivables 13,731,984 14,835,074 Inventories 96,983,153 100,630,252 Prepaid expenses 4,640,248 4,635,729 Total current assets 425,988,030 460,480,101 Noncurrent assets Cash and investments 135,072,833 125,312,636 Restricted cash and investments 23,411,934 72,185,172 Advances to other agencies 650,477 214,436 Retention receivable 823,942 2,313,364 Long-term loan receivables 20,000,000 20,000,000 Net OPEB asset - 2,264,891 Capital assets Non-Depreciable 637,515,792 627,237,709 Depreciable 2,853,904,858 2,863,737,737 Total noncurrent assets 3,671,379,836 3,713,265,945 Total assets 4,097,367,866 4,173,746,046 Deferred outflows of resources Deferred loss on refunding 72,294,728 83,475,740 Employer contributions subsequent to measurement date 16,163,814 6,198,142 OPEB contributions subsequent to measurement date 324,982 - Deferred actuarial amounts related to pensions 8,560,959 - Deferred actuarial amounts related to OPEB 275,965 - Total deferred outflows of resources 97,620,448 89,673,882 Liabilities Current liabilities Accounts payable and other liabilities 85,111,259 128,024,234 Interest payable 20,806,003 19,462,367 Construction deposits 429,144 434,034 Short-term liabilities 345,000,000 345,000,000 Current portion of long-term liabilities 57,293,370 56,430,666 Total current liabilities 508,639,776 549,351,301 Noncurrent liabilities Long-term liabilities 2,041,933,667 2,109,274,211 Net pension liability 71,135,027 62,547,589 Net OPEB liability 170,141 - Total noncurrent liabilities 2,113,238,835 2,171,821,800 Total liabilities 2,621,878,611 2,721,173,101 Deferred inflows of resources Deferred actuarial amounts related to pensions 2,561,555 5,178,446 Net postion Net investment in capital assets 1,138,160,938 1,148,155,974 Restricted for construction projects 147,352,064 156,718,296 Restricted for debt service 235,337 158,377 Unrestricted 284,799,809 232,035,734 Total net position $1,570,548,148 $1,537,068,381
Cash and Investments
June 30, 2017 and 2016
2017 2016 As of June 30, 2017 and 2016, restricted cash and investments balances were as follows Construction $2,663,522 $55,448,642 Debt Service Reserve 22,523,325 22,448,531 Pay-As-You-Go 147,352,064 156,647,460 Total $172,538,911 $234,544,633 As of June 30, 2017 and 2016, unrestricted cash and investments balances were as follows Operating $55,645,254 $49,282,921 Designated for Rate Stabilization 135,072,833 125,312,636 Designated for Equipment Replacement 1,195,081 2,893,890 Designated for Stored Water - 23,630,099 Total $191,913,168 $201,119,546 Total Cash Unrestricted 53% 46%