1 World Water Congress and Exhibition - Montréal, Canada WATER AND POWER UTILITY PUBLIC SECTOR...
-
Upload
shawn-allen -
Category
Documents
-
view
219 -
download
2
Transcript of 1 World Water Congress and Exhibition - Montréal, Canada WATER AND POWER UTILITY PUBLIC SECTOR...
1
World Water Congress and Exhibition - Montréal, Canada
WATER AND POWER UTILITY PUBLIC SECTOR FINANCINGPresented by: James B. McDaniel, Senior Assistant General Manager – Water
2
Discussion TopicsDiscussion Topics
Organization OverviewOrganization Overview Asset ManagementAsset Management Financial PlanningFinancial Planning Financing OptionsFinancing Options Financial MetricsFinancial Metrics Coordination EffortsCoordination Efforts SummarySummary
3
Discussion TopicsDiscussion Topics
Organization OverviewOrganization Overview Asset ManagementAsset Management Financial PlanningFinancial Planning Financing OptionsFinancing Options Financial MetricsFinancial Metrics Coordination EffortsCoordination Efforts SummarySummary
4
Organization OverviewOrganization OverviewSize and Scale of DWPSize and Scale of DWP
Power Business
Number of Customers 1,434,425
Employees 6,303
Transmission Miles 3,655
Distribution Miles 11,031
Water Business
Number of Customers 665,976
Employees 3,188
Delivered Volume (million gallons) 199,000
Pipeline Miles 7,300
LADWP’s Operations Extend Across Seven States, Affecting Four Million People
5
LADWP Board of CommissionersLADWP Board of Commissioners Sets policy and governs activities Rate-setting authority Subject to review and approval by
L.A. Mayor & City Council
Neighborhood CouncilsNeighborhood Councils 90+ Neighborhood Councils throughout City Composed of advisory citizen groups
Ratepayer Advocate (proposed)Ratepayer Advocate (proposed) Full-time paid positions to provide overall
oversight for LADWP, including rate-setting
Organization OverviewOrganization OverviewGovernance and Rate-Making AuthorityGovernance and Rate-Making Authority
6
Discussion TopicsDiscussion Topics
Organization OverviewOrganization Overview Asset ManagementAsset Management Financial PlanningFinancial Planning Financing OptionsFinancing Options Financial MetricsFinancial Metrics Coordination EffortsCoordination Efforts SummarySummary
7
Asset ManagementAsset Management
Asset Management is key to long-term financial Asset Management is key to long-term financial planning (both capital and O&M)planning (both capital and O&M)
Continuously refine operations and maintenance (O&M) practices
Condition assessment and useful life evaluation Develop replacement and rehabilitation strategy Determine staffing levels
required for O&M Determine long-term
funding needs
8
Discussion TopicsDiscussion Topics
Organization OverviewOrganization Overview Asset ManagementAsset Management Financial PlanningFinancial Planning Financing OptionsFinancing Options Financial MetricsFinancial Metrics Coordination EffortsCoordination Efforts SummarySummary
9
Financial PlanningFinancial Planning
Financial planning based on Board-adopted policies
Financial Outlook: O&M – annual Capital – 10 years
Performed on a continuous basis to adapt to changing needs
Considers current and future economic outlook to develop financing strategy
10
Financial PlanningFinancial Planning
Planning projections are developed for key Planning projections are developed for key financial planning factorsfinancial planning factors
Water and Power Sales Revenue Capital and O&M Expenses Borrowing Financial Ratios
11
1111
$0
$100
$200
$300
$400
$500
$600
$700
CAPITAL WATER RECLAMATION PROGRAM $6 $11 $19 $28 $58 $69 $69
CAPITAL WATER QUALITY PROGRAM $89 $120 $184 $295 $372 $296 $136
CAPITAL WATER INFRASTRUCTURE $94 $103 $120 $188 $179 $213 $305
CAPITAL WATER FUNDED JOINT $22 $14 $31 $30 $27 $27 $23
CAPITAL SECURITY $8 $12 $26 $27 $28 $35 $21
CAPITAL OWEN LAKE DUST MITIGATION $8 $66 $83 $18 $0 $0 $0
CAPITAL CAPITAL DEMAND SIDE MANAGEMENT $0 $1 $2 $1 $0 $0 $0
FY 07-08 Actl
FY 08-09 Actl
FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14
$555
$640$664
$588
$464
$328
$227
2/26/2010
CAPITAL(in $ Millions)
Financial PlanningFinancial PlanningCapital Budget BreakdownCapital Budget Breakdown
12
Discussion TopicsDiscussion Topics
Organization OverviewOrganization Overview Asset ManagementAsset Management Financial PlanningFinancial Planning Financing OptionsFinancing Options Financial MetricsFinancial Metrics Coordination EffortsCoordination Efforts SummarySummary
13
CashCash from water and power sales revenue funds day-to-day operations
DebtDebt from issuance of tax-exempt and taxable bonds (Build
America Bonds) funds capital program
State Revolving Fund (SRF) or GrantsState Revolving Fund (SRF) or Grants SRF are zero or low interest government loans grants typically from state or federal government
Financing OptionsFinancing Options
14
Water Facility ChargesWater Facility Charges Recovers cost of new facilities to serve new
development Existing rate payers do not pay for system
expansion Charge collected as a condition of service Recovers costs for pipes,
pump/tank facilities, services, fire hydrants, etc.
Financing OptionsFinancing Options
15
Public/Private Partnership (PPP)Public/Private Partnership (PPP) Private sector involvement can bring
creativity, efficiency, and capital to address complex public sector problems
Varying types of PPP; all involve risk-sharing PPP may provide additional revenue sources
and mix a variety of funding sources These partnerships can reduce demands on
constrained public budgets
Financing OptionsFinancing Options
16
Existing Debt Profile Existing Debt Profile Power SystemPower System
Data as of June 23, 2010
17
Existing Debt Profile Existing Debt Profile Water SystemWater System
Data as of June 23, 2010
18
Discussion TopicsDiscussion Topics
Organization OverviewOrganization Overview Asset ManagementAsset Management Financial PlanningFinancial Planning Financing OptionsFinancing Options Financial MetricsFinancial Metrics Coordination EffortsCoordination Efforts SummarySummary
19
Financial MetricsFinancial Metrics
Maximum Debt on Balance Sheet is 60% (i.e., minimum 40% cash financing)
Minimum Debt Service Coverage: Water System = 2.00 Power System = 2.25
20
Financial MetricsFinancial Metrics
Minimum Unrestricted Cash Balance (Liquidity):
Water System = $ 150 M Power System = $ 300 M
Debt Service Coverage and Liquidity are among the criteria that credit rating agencies consider
21
Discussion TopicsDiscussion Topics
Organization OverviewOrganization Overview Asset ManagementAsset Management Financial PlanningFinancial Planning Financing OptionsFinancing Options Financial MetricsFinancial Metrics Coordination EffortsCoordination Efforts SummarySummary
22
Coordination EffortsCoordination Efforts
LADWP is proactive in timely communications with credit rating agencies
Work with auditors and financial consultants to adequately respond to inquiries and prudently manage financial assets
We also work with our grant and/or loan funding partners to maximize opportunities and address administrative issues
23
Coordination EffortsCoordination Efforts
Water System and Power System manage finances separately; each has its own credit rating
Water and Power synergy exists in sharing services and costs from “Joint Services” arm of LADWP
24
Discussion TopicsDiscussion Topics
Organization OverviewOrganization Overview Asset ManagementAsset Management Financial PlanningFinancial Planning Financing OptionsFinancing Options Financial MetricsFinancial Metrics Coordination EffortsCoordination Efforts SummarySummary
25
SummarySummary
LADWP uses typical public agency financing methods, subject to policy set by governing body
Use asset management principles to not only maintain and upgrade infrastructure, but also to assist in financial planning
Financial planning process is dynamic need to maintain flexibility anticipate trends and long-term needs
26
SummarySummary
Financing options include cash, debt, grants, third party monies, and public/private partnerships
Financial metrics are established to ensure fiscal integrity, a high credit rating, and sufficient liquidity
Coordination with credit rating agencies and other stakeholders are proactive and timely
27
Questions?Questions?