chelan county pud quarterly financialreview · 2019-02-21 · chelan county pud. quarterly...
TRANSCRIPT
Chelan County PUD
Quarterly Financial ReviewFor the Year Ended Dec 31 2018(Note results are preliminary pending annual audit)
Board PresentationFeb 19 2019
What we will cover today
2
Financial highlightsYear-end resultsHistorical reviewFive-year look forwardInvestment reportPlanned 2019 Debt Actions
Update only no action required
Appendix Additional detailed information not covered today
2018 Key Highlights
3
Bottom-line results are better than budget
Combined District metrics meet targets
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
Overview - 2018Revenue Expense
bull Service Revenue slightly lower than budget due primarily to mild December temperatures ($400000)
bull Net Wholesale Revenue slightly below budget due in part to slightly lower than budgeted generation ($12M)
bull Hydro Long-Term Contract Revenue better than budget due primarily to retaining long-term contract surplus sales proceeds partially offset by lower production costs +$171M
bull Other Operating Revenue better than budget primarily due to FEMA proceeds and variable component of real time agreement + $46M
Total Revenues better than budget for the year +$20M
bull Operating Expenses below budget primarily due to a ~$6M actuarial reduction in pension expense (no change to pension program) and lower than planned fish and wildlife OampM due to project deferrals to 2019 ~$2M ($104M)
bull Non-Operating Net Expense better than budget due primarily to higher interest earnings from the higher cash balances ($28M)
Total Net Expenses better than budget for the year ($13M)
4
bull Combination of higher revenues and lower expenses results in a better Bottom Line for 2018 + $325M
(Compares to Q3 forecast of +$27M)
Bottom Line
Overview - 2018Capital Cash
bull Actual capital expenditures for the year were ~$89M ~$52M below the total budget of ~$141M
bull ~63 of 2018 Budget
bull Major drivers were the Rock Island projects with shifted timelines B1-B4 modernization (~$28M) B7 modernization (~$9M) RI Facilities upgrade ($5M)
(Compares to Q3 forecast of ~$99M and ~70 of Budget)
bull Positive bottom line lower capital spending and Alcoa contract payments have increased cash and investments balance for the year by $801M ($5913M)
(Compares to Q3 forecast of $5741M)
5
Debtbull Total debt is the same as budget
(~$24M reduction with balance at year end $5135M)
2192019 6
Financial Highlights -2018Focus on 2018 cost per unit
Electric delivered cost per avg kWh better than budget2018 centkWh result 599cent vs 634cent (actual vs budget)
Power production costs- 245cent vs 250cent (actual vs budget)Power distribution costs- 354cent vs 384cent (actual vs budget)
(Note Fully loaded cost is not a cost of service analysis which includes offsets)
Hydro production cost per avg MWh better than budget2018 $MWh result $187 vs $192 (actual vs budget)
Actual vs Budget Rocky Reach $135 vs $137 (operating expense ~98 2018)Rock Island $279 vs $291 (operating expense ~93 2018) Lake Chelan $313 vs $321 (operating expense ~98 2018)
2192019 7
Financial Highlights-2018Focus on 2018 cost per unit
Water cost per 1000 gallons better than budget2018 $1k gallons result $558 vs $578 (actual vs budget)
2018 operating expense 96 of budget
Wastewater cost per ERU better than budget2018 $ERU result $868 vs $1033 (actual vs budget)
2018 operating expense 83 of budget (Deferral of $120000 Lake Wenatchee Lab project)
Fiber cost per active premises better than budget2018 $premises result $381 vs $440 (actual vs budget)
2018 operating expense 86 of budget
8
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
2018 Bottom-Line Results
8
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Service Revenue 64344 64693 99 66583 -3
Net Wholesale Revenue 106765 108001 99 106794 0
Hydro LT Contract RevOther PP 136860 119795 114 129982 5
Other Operating Revenue 25698 21129 122 24646 4
Other Operating Expense (163773) (174161) 94 (166099) 1
Depreciation amp Tax Expense (52728) (52016) 101 (51672) -2
Operating Income(Loss) 117166 87440 134 110234 6
Non-Operating Activity (11901) (14682) 81 (11221) -6Bottom Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Service Revenue | 64344 | 64693 | 99 | 66583 | -3 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | 106794 | -0 | ||||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | 129982 | 5 | ||||||
| Other Operating Revenue | 25698 | 21129 | 122 | 24646 | 4 | ||||||
| Other Operating Expense | (163773) | (174161) | 94 | (166099) | 1 | ||||||
| Depreciation amp Tax Expense | (52728) | (52016) | 101 | (51672) | -2 | ||||||
| Operating Income(Loss) | 117166 | 87440 | 134 | 110234 | 6 | ||||||
| Non-Operating Activity | (11901) | (14682) | 81 | (11221) | -6 | ||||||
| Bottom Line | 105265 | 72758 | 145 | 99013 | 6 |
What we will cover today
2
Financial highlightsYear-end resultsHistorical reviewFive-year look forwardInvestment reportPlanned 2019 Debt Actions
Update only no action required
Appendix Additional detailed information not covered today
2018 Key Highlights
3
Bottom-line results are better than budget
Combined District metrics meet targets
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
Overview - 2018Revenue Expense
bull Service Revenue slightly lower than budget due primarily to mild December temperatures ($400000)
bull Net Wholesale Revenue slightly below budget due in part to slightly lower than budgeted generation ($12M)
bull Hydro Long-Term Contract Revenue better than budget due primarily to retaining long-term contract surplus sales proceeds partially offset by lower production costs +$171M
bull Other Operating Revenue better than budget primarily due to FEMA proceeds and variable component of real time agreement + $46M
Total Revenues better than budget for the year +$20M
bull Operating Expenses below budget primarily due to a ~$6M actuarial reduction in pension expense (no change to pension program) and lower than planned fish and wildlife OampM due to project deferrals to 2019 ~$2M ($104M)
bull Non-Operating Net Expense better than budget due primarily to higher interest earnings from the higher cash balances ($28M)
Total Net Expenses better than budget for the year ($13M)
4
bull Combination of higher revenues and lower expenses results in a better Bottom Line for 2018 + $325M
(Compares to Q3 forecast of +$27M)
Bottom Line
Overview - 2018Capital Cash
bull Actual capital expenditures for the year were ~$89M ~$52M below the total budget of ~$141M
bull ~63 of 2018 Budget
bull Major drivers were the Rock Island projects with shifted timelines B1-B4 modernization (~$28M) B7 modernization (~$9M) RI Facilities upgrade ($5M)
(Compares to Q3 forecast of ~$99M and ~70 of Budget)
bull Positive bottom line lower capital spending and Alcoa contract payments have increased cash and investments balance for the year by $801M ($5913M)
(Compares to Q3 forecast of $5741M)
5
Debtbull Total debt is the same as budget
(~$24M reduction with balance at year end $5135M)
2192019 6
Financial Highlights -2018Focus on 2018 cost per unit
Electric delivered cost per avg kWh better than budget2018 centkWh result 599cent vs 634cent (actual vs budget)
Power production costs- 245cent vs 250cent (actual vs budget)Power distribution costs- 354cent vs 384cent (actual vs budget)
(Note Fully loaded cost is not a cost of service analysis which includes offsets)
Hydro production cost per avg MWh better than budget2018 $MWh result $187 vs $192 (actual vs budget)
Actual vs Budget Rocky Reach $135 vs $137 (operating expense ~98 2018)Rock Island $279 vs $291 (operating expense ~93 2018) Lake Chelan $313 vs $321 (operating expense ~98 2018)
2192019 7
Financial Highlights-2018Focus on 2018 cost per unit
Water cost per 1000 gallons better than budget2018 $1k gallons result $558 vs $578 (actual vs budget)
2018 operating expense 96 of budget
Wastewater cost per ERU better than budget2018 $ERU result $868 vs $1033 (actual vs budget)
2018 operating expense 83 of budget (Deferral of $120000 Lake Wenatchee Lab project)
Fiber cost per active premises better than budget2018 $premises result $381 vs $440 (actual vs budget)
2018 operating expense 86 of budget
8
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
2018 Bottom-Line Results
8
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Service Revenue 64344 64693 99 66583 -3
Net Wholesale Revenue 106765 108001 99 106794 0
Hydro LT Contract RevOther PP 136860 119795 114 129982 5
Other Operating Revenue 25698 21129 122 24646 4
Other Operating Expense (163773) (174161) 94 (166099) 1
Depreciation amp Tax Expense (52728) (52016) 101 (51672) -2
Operating Income(Loss) 117166 87440 134 110234 6
Non-Operating Activity (11901) (14682) 81 (11221) -6Bottom Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Service Revenue | 64344 | 64693 | 99 | 66583 | -3 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | 106794 | -0 | ||||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | 129982 | 5 | ||||||
| Other Operating Revenue | 25698 | 21129 | 122 | 24646 | 4 | ||||||
| Other Operating Expense | (163773) | (174161) | 94 | (166099) | 1 | ||||||
| Depreciation amp Tax Expense | (52728) | (52016) | 101 | (51672) | -2 | ||||||
| Operating Income(Loss) | 117166 | 87440 | 134 | 110234 | 6 | ||||||
| Non-Operating Activity | (11901) | (14682) | 81 | (11221) | -6 | ||||||
| Bottom Line | 105265 | 72758 | 145 | 99013 | 6 |
2018 Key Highlights
3
Bottom-line results are better than budget
Combined District metrics meet targets
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
Overview - 2018Revenue Expense
bull Service Revenue slightly lower than budget due primarily to mild December temperatures ($400000)
bull Net Wholesale Revenue slightly below budget due in part to slightly lower than budgeted generation ($12M)
bull Hydro Long-Term Contract Revenue better than budget due primarily to retaining long-term contract surplus sales proceeds partially offset by lower production costs +$171M
bull Other Operating Revenue better than budget primarily due to FEMA proceeds and variable component of real time agreement + $46M
Total Revenues better than budget for the year +$20M
bull Operating Expenses below budget primarily due to a ~$6M actuarial reduction in pension expense (no change to pension program) and lower than planned fish and wildlife OampM due to project deferrals to 2019 ~$2M ($104M)
bull Non-Operating Net Expense better than budget due primarily to higher interest earnings from the higher cash balances ($28M)
Total Net Expenses better than budget for the year ($13M)
4
bull Combination of higher revenues and lower expenses results in a better Bottom Line for 2018 + $325M
(Compares to Q3 forecast of +$27M)
Bottom Line
Overview - 2018Capital Cash
bull Actual capital expenditures for the year were ~$89M ~$52M below the total budget of ~$141M
bull ~63 of 2018 Budget
bull Major drivers were the Rock Island projects with shifted timelines B1-B4 modernization (~$28M) B7 modernization (~$9M) RI Facilities upgrade ($5M)
(Compares to Q3 forecast of ~$99M and ~70 of Budget)
bull Positive bottom line lower capital spending and Alcoa contract payments have increased cash and investments balance for the year by $801M ($5913M)
(Compares to Q3 forecast of $5741M)
5
Debtbull Total debt is the same as budget
(~$24M reduction with balance at year end $5135M)
2192019 6
Financial Highlights -2018Focus on 2018 cost per unit
Electric delivered cost per avg kWh better than budget2018 centkWh result 599cent vs 634cent (actual vs budget)
Power production costs- 245cent vs 250cent (actual vs budget)Power distribution costs- 354cent vs 384cent (actual vs budget)
(Note Fully loaded cost is not a cost of service analysis which includes offsets)
Hydro production cost per avg MWh better than budget2018 $MWh result $187 vs $192 (actual vs budget)
Actual vs Budget Rocky Reach $135 vs $137 (operating expense ~98 2018)Rock Island $279 vs $291 (operating expense ~93 2018) Lake Chelan $313 vs $321 (operating expense ~98 2018)
2192019 7
Financial Highlights-2018Focus on 2018 cost per unit
Water cost per 1000 gallons better than budget2018 $1k gallons result $558 vs $578 (actual vs budget)
2018 operating expense 96 of budget
Wastewater cost per ERU better than budget2018 $ERU result $868 vs $1033 (actual vs budget)
2018 operating expense 83 of budget (Deferral of $120000 Lake Wenatchee Lab project)
Fiber cost per active premises better than budget2018 $premises result $381 vs $440 (actual vs budget)
2018 operating expense 86 of budget
8
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
2018 Bottom-Line Results
8
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Service Revenue 64344 64693 99 66583 -3
Net Wholesale Revenue 106765 108001 99 106794 0
Hydro LT Contract RevOther PP 136860 119795 114 129982 5
Other Operating Revenue 25698 21129 122 24646 4
Other Operating Expense (163773) (174161) 94 (166099) 1
Depreciation amp Tax Expense (52728) (52016) 101 (51672) -2
Operating Income(Loss) 117166 87440 134 110234 6
Non-Operating Activity (11901) (14682) 81 (11221) -6Bottom Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Service Revenue | 64344 | 64693 | 99 | 66583 | -3 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | 106794 | -0 | ||||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | 129982 | 5 | ||||||
| Other Operating Revenue | 25698 | 21129 | 122 | 24646 | 4 | ||||||
| Other Operating Expense | (163773) | (174161) | 94 | (166099) | 1 | ||||||
| Depreciation amp Tax Expense | (52728) | (52016) | 101 | (51672) | -2 | ||||||
| Operating Income(Loss) | 117166 | 87440 | 134 | 110234 | 6 | ||||||
| Non-Operating Activity | (11901) | (14682) | 81 | (11221) | -6 | ||||||
| Bottom Line | 105265 | 72758 | 145 | 99013 | 6 |
Overview - 2018Revenue Expense
bull Service Revenue slightly lower than budget due primarily to mild December temperatures ($400000)
bull Net Wholesale Revenue slightly below budget due in part to slightly lower than budgeted generation ($12M)
bull Hydro Long-Term Contract Revenue better than budget due primarily to retaining long-term contract surplus sales proceeds partially offset by lower production costs +$171M
bull Other Operating Revenue better than budget primarily due to FEMA proceeds and variable component of real time agreement + $46M
Total Revenues better than budget for the year +$20M
bull Operating Expenses below budget primarily due to a ~$6M actuarial reduction in pension expense (no change to pension program) and lower than planned fish and wildlife OampM due to project deferrals to 2019 ~$2M ($104M)
bull Non-Operating Net Expense better than budget due primarily to higher interest earnings from the higher cash balances ($28M)
Total Net Expenses better than budget for the year ($13M)
4
bull Combination of higher revenues and lower expenses results in a better Bottom Line for 2018 + $325M
(Compares to Q3 forecast of +$27M)
Bottom Line
Overview - 2018Capital Cash
bull Actual capital expenditures for the year were ~$89M ~$52M below the total budget of ~$141M
bull ~63 of 2018 Budget
bull Major drivers were the Rock Island projects with shifted timelines B1-B4 modernization (~$28M) B7 modernization (~$9M) RI Facilities upgrade ($5M)
(Compares to Q3 forecast of ~$99M and ~70 of Budget)
bull Positive bottom line lower capital spending and Alcoa contract payments have increased cash and investments balance for the year by $801M ($5913M)
(Compares to Q3 forecast of $5741M)
5
Debtbull Total debt is the same as budget
(~$24M reduction with balance at year end $5135M)
2192019 6
Financial Highlights -2018Focus on 2018 cost per unit
Electric delivered cost per avg kWh better than budget2018 centkWh result 599cent vs 634cent (actual vs budget)
Power production costs- 245cent vs 250cent (actual vs budget)Power distribution costs- 354cent vs 384cent (actual vs budget)
(Note Fully loaded cost is not a cost of service analysis which includes offsets)
Hydro production cost per avg MWh better than budget2018 $MWh result $187 vs $192 (actual vs budget)
Actual vs Budget Rocky Reach $135 vs $137 (operating expense ~98 2018)Rock Island $279 vs $291 (operating expense ~93 2018) Lake Chelan $313 vs $321 (operating expense ~98 2018)
2192019 7
Financial Highlights-2018Focus on 2018 cost per unit
Water cost per 1000 gallons better than budget2018 $1k gallons result $558 vs $578 (actual vs budget)
2018 operating expense 96 of budget
Wastewater cost per ERU better than budget2018 $ERU result $868 vs $1033 (actual vs budget)
2018 operating expense 83 of budget (Deferral of $120000 Lake Wenatchee Lab project)
Fiber cost per active premises better than budget2018 $premises result $381 vs $440 (actual vs budget)
2018 operating expense 86 of budget
8
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
2018 Bottom-Line Results
8
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Service Revenue 64344 64693 99 66583 -3
Net Wholesale Revenue 106765 108001 99 106794 0
Hydro LT Contract RevOther PP 136860 119795 114 129982 5
Other Operating Revenue 25698 21129 122 24646 4
Other Operating Expense (163773) (174161) 94 (166099) 1
Depreciation amp Tax Expense (52728) (52016) 101 (51672) -2
Operating Income(Loss) 117166 87440 134 110234 6
Non-Operating Activity (11901) (14682) 81 (11221) -6Bottom Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Service Revenue | 64344 | 64693 | 99 | 66583 | -3 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | 106794 | -0 | ||||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | 129982 | 5 | ||||||
| Other Operating Revenue | 25698 | 21129 | 122 | 24646 | 4 | ||||||
| Other Operating Expense | (163773) | (174161) | 94 | (166099) | 1 | ||||||
| Depreciation amp Tax Expense | (52728) | (52016) | 101 | (51672) | -2 | ||||||
| Operating Income(Loss) | 117166 | 87440 | 134 | 110234 | 6 | ||||||
| Non-Operating Activity | (11901) | (14682) | 81 | (11221) | -6 | ||||||
| Bottom Line | 105265 | 72758 | 145 | 99013 | 6 |
Overview - 2018Capital Cash
bull Actual capital expenditures for the year were ~$89M ~$52M below the total budget of ~$141M
bull ~63 of 2018 Budget
bull Major drivers were the Rock Island projects with shifted timelines B1-B4 modernization (~$28M) B7 modernization (~$9M) RI Facilities upgrade ($5M)
(Compares to Q3 forecast of ~$99M and ~70 of Budget)
bull Positive bottom line lower capital spending and Alcoa contract payments have increased cash and investments balance for the year by $801M ($5913M)
(Compares to Q3 forecast of $5741M)
5
Debtbull Total debt is the same as budget
(~$24M reduction with balance at year end $5135M)
2192019 6
Financial Highlights -2018Focus on 2018 cost per unit
Electric delivered cost per avg kWh better than budget2018 centkWh result 599cent vs 634cent (actual vs budget)
Power production costs- 245cent vs 250cent (actual vs budget)Power distribution costs- 354cent vs 384cent (actual vs budget)
(Note Fully loaded cost is not a cost of service analysis which includes offsets)
Hydro production cost per avg MWh better than budget2018 $MWh result $187 vs $192 (actual vs budget)
Actual vs Budget Rocky Reach $135 vs $137 (operating expense ~98 2018)Rock Island $279 vs $291 (operating expense ~93 2018) Lake Chelan $313 vs $321 (operating expense ~98 2018)
2192019 7
Financial Highlights-2018Focus on 2018 cost per unit
Water cost per 1000 gallons better than budget2018 $1k gallons result $558 vs $578 (actual vs budget)
2018 operating expense 96 of budget
Wastewater cost per ERU better than budget2018 $ERU result $868 vs $1033 (actual vs budget)
2018 operating expense 83 of budget (Deferral of $120000 Lake Wenatchee Lab project)
Fiber cost per active premises better than budget2018 $premises result $381 vs $440 (actual vs budget)
2018 operating expense 86 of budget
8
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
2018 Bottom-Line Results
8
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Service Revenue 64344 64693 99 66583 -3
Net Wholesale Revenue 106765 108001 99 106794 0
Hydro LT Contract RevOther PP 136860 119795 114 129982 5
Other Operating Revenue 25698 21129 122 24646 4
Other Operating Expense (163773) (174161) 94 (166099) 1
Depreciation amp Tax Expense (52728) (52016) 101 (51672) -2
Operating Income(Loss) 117166 87440 134 110234 6
Non-Operating Activity (11901) (14682) 81 (11221) -6Bottom Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Service Revenue | 64344 | 64693 | 99 | 66583 | -3 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | 106794 | -0 | ||||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | 129982 | 5 | ||||||
| Other Operating Revenue | 25698 | 21129 | 122 | 24646 | 4 | ||||||
| Other Operating Expense | (163773) | (174161) | 94 | (166099) | 1 | ||||||
| Depreciation amp Tax Expense | (52728) | (52016) | 101 | (51672) | -2 | ||||||
| Operating Income(Loss) | 117166 | 87440 | 134 | 110234 | 6 | ||||||
| Non-Operating Activity | (11901) | (14682) | 81 | (11221) | -6 | ||||||
| Bottom Line | 105265 | 72758 | 145 | 99013 | 6 |
2192019 6
Financial Highlights -2018Focus on 2018 cost per unit
Electric delivered cost per avg kWh better than budget2018 centkWh result 599cent vs 634cent (actual vs budget)
Power production costs- 245cent vs 250cent (actual vs budget)Power distribution costs- 354cent vs 384cent (actual vs budget)
(Note Fully loaded cost is not a cost of service analysis which includes offsets)
Hydro production cost per avg MWh better than budget2018 $MWh result $187 vs $192 (actual vs budget)
Actual vs Budget Rocky Reach $135 vs $137 (operating expense ~98 2018)Rock Island $279 vs $291 (operating expense ~93 2018) Lake Chelan $313 vs $321 (operating expense ~98 2018)
2192019 7
Financial Highlights-2018Focus on 2018 cost per unit
Water cost per 1000 gallons better than budget2018 $1k gallons result $558 vs $578 (actual vs budget)
2018 operating expense 96 of budget
Wastewater cost per ERU better than budget2018 $ERU result $868 vs $1033 (actual vs budget)
2018 operating expense 83 of budget (Deferral of $120000 Lake Wenatchee Lab project)
Fiber cost per active premises better than budget2018 $premises result $381 vs $440 (actual vs budget)
2018 operating expense 86 of budget
8
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
2018 Bottom-Line Results
8
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Service Revenue 64344 64693 99 66583 -3
Net Wholesale Revenue 106765 108001 99 106794 0
Hydro LT Contract RevOther PP 136860 119795 114 129982 5
Other Operating Revenue 25698 21129 122 24646 4
Other Operating Expense (163773) (174161) 94 (166099) 1
Depreciation amp Tax Expense (52728) (52016) 101 (51672) -2
Operating Income(Loss) 117166 87440 134 110234 6
Non-Operating Activity (11901) (14682) 81 (11221) -6Bottom Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Service Revenue | 64344 | 64693 | 99 | 66583 | -3 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | 106794 | -0 | ||||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | 129982 | 5 | ||||||
| Other Operating Revenue | 25698 | 21129 | 122 | 24646 | 4 | ||||||
| Other Operating Expense | (163773) | (174161) | 94 | (166099) | 1 | ||||||
| Depreciation amp Tax Expense | (52728) | (52016) | 101 | (51672) | -2 | ||||||
| Operating Income(Loss) | 117166 | 87440 | 134 | 110234 | 6 | ||||||
| Non-Operating Activity | (11901) | (14682) | 81 | (11221) | -6 | ||||||
| Bottom Line | 105265 | 72758 | 145 | 99013 | 6 |
2192019 7
Financial Highlights-2018Focus on 2018 cost per unit
Water cost per 1000 gallons better than budget2018 $1k gallons result $558 vs $578 (actual vs budget)
2018 operating expense 96 of budget
Wastewater cost per ERU better than budget2018 $ERU result $868 vs $1033 (actual vs budget)
2018 operating expense 83 of budget (Deferral of $120000 Lake Wenatchee Lab project)
Fiber cost per active premises better than budget2018 $premises result $381 vs $440 (actual vs budget)
2018 operating expense 86 of budget
8
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
2018 Bottom-Line Results
8
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Service Revenue 64344 64693 99 66583 -3
Net Wholesale Revenue 106765 108001 99 106794 0
Hydro LT Contract RevOther PP 136860 119795 114 129982 5
Other Operating Revenue 25698 21129 122 24646 4
Other Operating Expense (163773) (174161) 94 (166099) 1
Depreciation amp Tax Expense (52728) (52016) 101 (51672) -2
Operating Income(Loss) 117166 87440 134 110234 6
Non-Operating Activity (11901) (14682) 81 (11221) -6Bottom Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Service Revenue | 64344 | 64693 | 99 | 66583 | -3 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | 106794 | -0 | ||||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | 129982 | 5 | ||||||
| Other Operating Revenue | 25698 | 21129 | 122 | 24646 | 4 | ||||||
| Other Operating Expense | (163773) | (174161) | 94 | (166099) | 1 | ||||||
| Depreciation amp Tax Expense | (52728) | (52016) | 101 | (51672) | -2 | ||||||
| Operating Income(Loss) | 117166 | 87440 | 134 | 110234 | 6 | ||||||
| Non-Operating Activity | (11901) | (14682) | 81 | (11221) | -6 | ||||||
| Bottom Line | 105265 | 72758 | 145 | 99013 | 6 |
8
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
2018 Bottom-Line Results
8
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Service Revenue 64344 64693 99 66583 -3
Net Wholesale Revenue 106765 108001 99 106794 0
Hydro LT Contract RevOther PP 136860 119795 114 129982 5
Other Operating Revenue 25698 21129 122 24646 4
Other Operating Expense (163773) (174161) 94 (166099) 1
Depreciation amp Tax Expense (52728) (52016) 101 (51672) -2
Operating Income(Loss) 117166 87440 134 110234 6
Non-Operating Activity (11901) (14682) 81 (11221) -6Bottom Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Service Revenue | 64344 | 64693 | 99 | 66583 | -3 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | 106794 | -0 | ||||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | 129982 | 5 | ||||||
| Other Operating Revenue | 25698 | 21129 | 122 | 24646 | 4 | ||||||
| Other Operating Expense | (163773) | (174161) | 94 | (166099) | 1 | ||||||
| Depreciation amp Tax Expense | (52728) | (52016) | 101 | (51672) | -2 | ||||||
| Operating Income(Loss) | 117166 | 87440 | 134 | 110234 | 6 | ||||||
| Non-Operating Activity | (11901) | (14682) | 81 | (11221) | -6 | ||||||
| Bottom Line | 105265 | 72758 | 145 | 99013 | 6 |
Cognos_Office_Connection_Cache
Sheet1
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Service Revenue | 64344 | 64693 | 99 | 66583 | -3 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | 106794 | -0 | ||||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | 129982 | 5 | ||||||
| Other Operating Revenue | 25698 | 21129 | 122 | 24646 | 4 | ||||||
| Other Operating Expense | (163773) | (174161) | 94 | (166099) | 1 | ||||||
| Depreciation amp Tax Expense | (52728) | (52016) | 101 | (51672) | -2 | ||||||
| Operating Income(Loss) | 117166 | 87440 | 134 | 110234 | 6 | ||||||
| Non-Operating Activity | (11901) | (14682) | 81 | (11221) | -6 | ||||||
| Bottom Line | 105265 | 72758 | 145 | 99013 | 6 |
Sheet1
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Service Revenue | 64344 | 64693 | 99 | 66583 | -3 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | 106794 | -0 | ||||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | 129982 | 5 | ||||||
| Other Operating Revenue | 25698 | 21129 | 122 | 24646 | 4 | ||||||
| Other Operating Expense | (163773) | (174161) | 94 | (166099) | 1 | ||||||
| Depreciation amp Tax Expense | (52728) | (52016) | 101 | (51672) | -2 | ||||||
| Operating Income(Loss) | 117166 | 87440 | 134 | 110234 | 6 | ||||||
| Non-Operating Activity | (11901) | (14682) | 81 | (11221) | -6 | ||||||
| Bottom Line | 105265 | 72758 | 145 | 99013 | 6 |
9
Business Line ldquoBottom-Linerdquo Results
2192019
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)2018
Actuals2018
Budget of
budget
2018 Prior Qtr
Forecast change from prior
Cost-Based Activity 57500 35569 162 51452 12
Market-Based Activity 50474 47106 107 52024 -3
Retail Activity (21108) (25525) 83 (22382) 6
Other Activity 11933 11329 105 12962 -8
Integrated Electric 98799 68480 144 94057 5Fiber amp Telecom 4738 3839 123 3873 22Water 1827 716 255 1219 50Wastewater (99) (277) (36) (137) 27Combined Bottom-Line 105265 72758 145 99013 6
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
Cognos_Office_Connection_Cache
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
Sheet1
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 2018 Prior Qtr Forecast | change from prior | ||||||
| Cost-Based Activity | 57500 | 35569 | 162 | 51452 | 12 | ||||||
| Market-Based Activity | 50474 | 47081 | 107 | 52024 | -3 | ||||||
| Retail Activity | (21108) | (25986) | 81 | (22382) | 6 | ||||||
| Other Activity | 11933 | 11014 | 108 | 12962 | -8 | ||||||
| Integrated Electric | 98799 | 67679 | 146 | 94057 | 5 | ||||||
| Fiber amp Telecom | 4738 | 3839 | 123 | 3873 | 22 | ||||||
| Water | 1827 | 696 | 263 | 1219 | 50 | ||||||
| Wastewater | (99) | (292) | (34) | (137) | 27 | ||||||
| Combined Bottom-Line | 105265 | 71922 | 146 | 99013 | 6 |
10
Capital Expenditures
2192019
(in 000s)2018
Actuals 2018 Budget of
budget
2018 Prior Qtr
Forecast change from prior
Electric Distribution 12356 15069 82 13852 -11
Network Transmission 1630 2904 56 1805 -10
Rocky Reach 5564 8111 69 5869 -5
Rock Island 46202 83778 55 54478 -15
Lake Chelan 1748 1802 97 1716 2
Internal Services 15085 21047 72 14596 3
Fiber amp Telecom 4338 5837 74 3891 11
Water 954 1281 74 1086 -12
Wastewater 901 1409 64 1163 -23
Total Expenditures 88777 141239 63 98455 -10
Contributions (5364) (4713) 114 (5164) 4
Capital net of CIAC 83413 136525 61 93292 -11
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
Cognos_Office_Connection_Cache
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
Sheet1
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
| (in 000s) | 2018 Actuals | 2018 Budget | of budget | 0 | 2018 Prior Qtr Forecast | change from prior | 2018 Budget | ||||||||
| Electric Distribution | 12356 | 15069 | 82 | - 0 | 13852 | -11 | 1506905000 | ||||||||
| Network Transmission | 1630 | 2904 | 56 | - 0 | 1805 | -10 | 290431200 | ||||||||
| Rocky Reach | 5564 | 8111 | 69 | - 0 | 5869 | -5 | 811136700 | ||||||||
| Rock Island | 46202 | 83778 | 55 | - 0 | 54478 | -15 | 8377813900 | ||||||||
| Lake Chelan | 1748 | 1802 | 97 | - 0 | 1716 | 2 | 180156500 | ||||||||
| Internal Services | 15085 | 21047 | 72 | - 0 | 14596 | 3 | 2104695100 | ||||||||
| Fiber amp Telecom | 4338 | 5837 | 74 | - 0 | 3891 | 11 | 583680000 | ||||||||
| Water | 954 | 1281 | 74 | - 0 | 1086 | -12 | 128095000 | ||||||||
| Wastewater | 901 | 1409 | 64 | - 0 | 1163 | -23 | 140936700 | ||||||||
| Total Expenditures | 88777 | 141239 | 63 | - 0 | 98455 | -10 | 14123850100 | ||||||||
| Contributions | (5364) | (4713) | 114 | - 0 | (5164) | 4 | -471340000 | ||||||||
| Capital net of CIAC | 83413 | 136525 | 61 | - 0 | 93292 | -11 | 13652510100 |
Overview of 2018 Cash Flow$ Million
Bottomndashline result (2018) $ 105Add back non-cash related items (depreciation) $ 44
Estimated earned funds from operations $149
Capital Project Expenditures $ 89Net Debt Reductions $ 24 Other Misc Impacts (change in AR AP Inventory Etc) $ 18 Receipt from Alcoa (Deferred contract charge) ($62)Added to cash reserves $ 80
Estimated use of funds $149
2192019 11
Cash and investments beginning of year $ 511Added to cash reserves $80Cash and investments end of Q4 $ 591
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Cash amp Investments Balance
2192019 12
($ Millions) 123118 123117
Unrestricted funds $407 $327
Board DesignatedHeadquartersService Center Strategic Facilities Fund 50 20
Total Unrestricted Funds 457 347
Restricted ndash DRC amp CRC funds for Hydro capitaldebt 50 78
Total Liquidity (policy minimum $175M) $507 $425
Restricted - bond reserve funds 53 53Restricted - power contract deposits 19 21Restricted - self insurance and other funds 12 12
Total Cash and Investments $591 $511
Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 13
$116 $129 $132 $157 $152 $164
$30 $38 $43
$67 $68 $89
$-
$50
$100
$150
$200
$250
$300
2013 2014 2015 2016 2017 2018
Operations amp Maintenance Plant Additions
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Historical Review of the Districtrsquos Financial Results(amounts in millions)
2192019 14
$421 $441 $418 $485 $511 $591
$816 $735
$612 $590 $537 $514
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2013 2014 2015 2016 2017 2018
Cash DebtPayoff ~$69m
Payoff ~$82m Payoff
~$122m Payoff ~$23m Payoff
~$52mPayoff ~$24m
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022
Liquidity (Greater calculated min $190M-$200M Expected) $507M $423M $326M $232M $187M
Liquidity (Greater calculated min $190M-$200M Unusual) $419M $315M $214M $185M
Debt Ratio (Expected case lt35 by 2019) 340 306 278 249 235
Debt Ratio (Unusual case lt35 by 2019) 307 280 252 252
Days Cash on Hand (Expected case gt250) 741 591 455 342 269
Days Cash on Hand (Unusual case gt 250) 585 440 335 267
Combined Debt Cover (Expected case gt 200x) 341 287 253 251 246
Combined Debt Cover (Unusual case gt125x) 278 241 236 221
Rate of Return (Expected case gt 4 thru 2019) 92 61Sunset
Rate of Return (Unusual case gt 2 thru 2019) 58
Bottom Line Results (Expected case) $105M $77M $57M $55M $52M
Bottom Line Results (Unusual case) $73M $51M $47M $43M
Debt Outstanding (Expected case) $514M $475M $436M $395M $381M
Debt Outstanding (Unusual case) $475M $436M $395M $407M
The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 15
- Financial Policy Metrics within 10 of target which requires Board communication per resolution Action plan assumes issuance of debt in 2022 to maintain liquidity and meet financial targets
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022WATER Business Line
Operating Expense Coverage (target gt120) 136 131 127 128 129
Cash Reserves (target gt $125 million) $38M $30M $06M $04M ($07M)
Debt Ratio (target lt35) 10 7 4 - -
WASTEWATER Business Line
Operating Expense Coverage (target gt100 by 2019) 95 86 99 99 98
Cash Reserves (target gt $200K) $17M $26M $29M $26M $24M
Debt Ratio (target lt35) --- 22 22 27 27
FIBER Business Line
Operating Expense Coverage (target gt120) 176 144 160 148 146
Cash Reserves (target gt $20 million) $156M $129M $140M $153M $150M
Debt Ratio (target lt35) --- --- --- --- ---
16
Financial Policy not met Action plan is to address this through upcoming strategic planning process
Financial Policy Metric within 10 of target which requires Board communication per resolution Action plan is to monitor ongoing forecasts
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Quarterly Reporting RequirementIndividual Business Line Financial Policies
Business Lines 2018 2019 2020 2021 2022
Integrated Electric Business Line
Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65
Retail Total Cost Ratio 70 66 65 66 64
Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90
Retail OMampT Cost Ratio 94 85 86 90 89
Retail Rate Support Limit (target) $256M $263M $269M $276M $283M
Retail Rate Support $211M $283M $303M $304M $330M
Market Based Margin Limit (target) $250M $250M $250M $250M $250M
Market Based Margin $505M $444M $301M $290M $295M
17
These are ldquotestrdquo metrics developed during 2018-2022 business planning
Monitoring during test period
ldquoTestrdquo Metrics are indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets
Test metrics may be changed in the future as we continue to learn more by using them
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094
bull Q4 2018 yield increased to 234 due to improving market interest ratesbull December 19 2018 Federal Open Market Committee meeting report
ndash Labor market has continued to strengthen and economic activity has been rising at strong rate
ndash Inflation has remained near the Committeersquos 2 percent objectivendash Federal funds rate target changed from 225 to 250ndash Gradually increasing although continued relatively low rates are
anticipated through 2019bull Uncertainty around changes in the political climate can influence financial
markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support
safety of principal and liquidity and mitigate interest rate volatility
Q1 2018 Q2 2018 Q3 2018 Q4 2018 YTD 2018 WAM
Average Invested Book Value ($M) $517 $534 $569 $584 $551
District Yield 193 202 225 234 215 1005
Benchmarks
3 Month T-Bill 158 187 206 237 197 92
SampP US Treasury 1-3 Year Index 129 150 174 196 163 692
Full report is in the Appendix
Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length
18
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
2192019
Planned 2019 Debt Actions
19
bull 2019 Rock Island Internal Loanndash Capital plan needs beyond power sales contract reservesndash Will return to Board in March to present specific terms and
to request approval
bull Potential refinancing opportunities for savingsndash Continue to evaluate see some possibilitiesndash If opportunities are favorable we will return to request
Board approval later this year
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
2018 Summary
20
2018 results are better than budget
Plans for significant capital investments are expected to fully use cash reserves
Long-term financial metrics on track with an assumed new debt issuance in the next five-year planning horizon
Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue Public Power Benefit program
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
21
Appendix
The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and
uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in
making such projections and actual outcomes and certain other risks
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Net Wholesale Revenue
2018 results $12 million below budget ($1068M vs $1080M)
Annual result in line with Q3 forecast of $1068M
Drivers- Generation 99 of budget
(Q3 Forecast for YE101 of budget)+ Retail energy use 99 of budget
(Q3 Forecast for YE 105 of budget)- Hedging program minimizes impact of 2018 flat price $308 vs $228 budget
Hydro Long-Term Contract Revenue2018 results $171 million above
budget ($1382M vs $1211M)
Annual result higher than Q3 forecast of $1313M
Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (96)
(Q3 forecast for YE at 95)+ ldquoPlusrdquo contract charges above budgeted
levels (+$16M)(Q3 forecast for YE at +12M)
Financial Highlights - Revenue
2192019 22
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Service Revenue2018 results $04 million below
budget ($643M vs $647M)
Annual result lower than Q3 forecast of $666M
Drivers- Retail energy use at 99 of budget (Residential ~102 Industrial ~112 Commercial ~95)- Very mild December
Other Operating Revenue
2018 results $46 million above budget ($257M vs $211M)
Annual result slightly higher than Q3 forecast of $246M
Drivers + FEMA proceeds ~$05M (Fire-2015)+ Hydro Contract Revenue ~$16M YTD+ Variable component of real time agreement ~$24M
Financial Highlights - Revenue
2192019 23
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Operating Expense
2018 results $104 million below budget ($1638 vs $1742M)
Annual result slightly lower than Q3 forecast of $1661M
Drivers - Actuarial reduction in pension expense- Planned fishway OampM expenditures deferred to 2019
Non-OperatingNet Expense
2018 results $28M better than budget ($119M vs $147M)
Annual result in line with Q3 forecast of $112M
Drivers + Higher contributions in aid of construction + Increased forecasted interest earnings on higher cash reserves
Financial Highlights - Expenses
2192019 24
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Financial Highlights ndash Balance Sheet
2192019 25
Capital expenditures below budget bull 2018 $888 million vs budget of $1412 millionbull 2018 results below Q3 forecast of $985M million ($97M)
Individual project adjustments
bull Bavarian Substation (~$1M shifted to 2019 2020 2021)bull LMR Network Replacement (~$2M shifted to 2019) bull ISS - Operations and Service Center (~$3M shifted to 2019 2020)bull RI B1 thru B4 Modernization (~$28M shifted to 2019 2020)bull RI B7 Modernization (~$9M shifted to 2019)bull RI Facilities Upgrade (~$5M shifted to 2019 2020)
Cash remains strong Debt reduction strategy on track
bull Cash balance increased ~$80 million in 2018 bull Debt balance decreased ~$24 million in 2018
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
26
Service Revenue
2192019
Note Excludes internal intersystem revenues
(in 000s)Actuals
2018Budget 2018 Variance
Residential Electric 26019 25586 102 In line with budget
Commercial Electric 15976 16611 96 Mild December lower usage
Industrial Electric 5001 4392 114
High Density Load 1781 2265 79
Other Electric 1492 1814 82 Small dollar variance
Electric Service 50269 50668 99
Water Service 6007 6038 99 In line with budget
Wastewater Service 724 701 103 Small dollar variance
Fiber amp Telecom 7344 7287 101 In line with budget
Service Revenue 64344 64693 99
Industrial amp HDL in aggregate at 98 of budget
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Cognos_Office_Connection_Cache
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
Sheet1
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Residential Electric | 26019 | 25586 | 102 | In line with budget | |||||
| Commercial Electric | 15976 | 16611 | 96 | Mild December lower usage | |||||
| Industrial Electric | 5001 | 4392 | 114 | Industrial amp HDL in aggregate at 98 of budget | |||||
| High Density Load | 1781 | 2265 | 79 | ||||||
| Other Electric | 1492 | 1814 | 82 | Small dollar variance | |||||
| Electric Service | 50269 | 50668 | 99 | ||||||
| Water Service | 6007 | 6038 | 99 | In line with budget | |||||
| Wastewater Service | 724 | 701 | 103 | Small dollar variance | |||||
| Fiber amp Telecom | 7344 | 7287 | 101 | In line with budget | |||||
| Service Revenue | 64344 | 64693 | 99 |
27
Net Surplus Energy Revenue
2192019
(in 000s)Actuals 2018
Budget 2018 Variance
Slice Contracts 81287 75149 108 Additional 3 slice executed post budget
Net Block Trades 19974 26624 75Other Net Wholesale 5504 6227 88Net Wholesale Revenue 106765 108001 99LT Hydro Contracts 138182 121115 114 Operating costs 98 adders 134 Budget
Less Other Purchased Power (1322) (1320) 100 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114
Surplus Energy Revenue 243625 227796 107
Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate
77 of Budget)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
Cognos_Office_Connection_Cache
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
Sheet1
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Slice Contracts | 81287 | 75149 | 108 | Additional 3 slice executed post budget | |||||
| Net Block Trades | 19974 | 26624 | 75 | Unplanned Lake Chelan Outage Offset by increased Specfied Source Rev - (Aggregate 77 of Budget) | |||||
| Other Net Wholesale | 5504 | 6227 | 88 | ||||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | ||||||
| LT Hydro Contracts | 138182 | 121115 | 114 | Operating costs 98 adders 134 Budget | |||||
| Less Other Purchased Power | (1322) | (1320) | 100 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | ||||||
| Surplus Energy Revenue | 243625 | 227796 | 107 |
28
Operating Expense
2192019
(in 000s)Actuals
2018Budget 2018 Variance
Hydro Operations amp Maintenance 59025 59438 99 In line with budget
Hydro Fish amp Wildlife 14274 16751 85 Deferral of planned projects to 2019
Hydro Parks amp Recreation 7662 7730 99 In line with budget
Electric Distribution 14487 15398 94 Underground line and substation maint
Electric Transmission 13065 13221 99 In line with budget
Misc Power Supply Expenses 3967 5317 75 Legal and Consulting support EPampT
Water amp Wastewater 2894 3102 93 Small dollar variance
Fiber Network 4247 4580 93 Premise devise maint
Customer Accounts amp Service 3979 3999 100 In line with budget
Conservation amp Customer Assist 2783 3459 80 Regulatory asset amortization
Insurance amp FERC Fees 8252 8670 95 Self insurance stop loss
Other Admin amp General 29136 32497 90 Pension expense adjustmentTotal 163773 174161 94
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
Cognos_Office_Connection_Cache
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
Sheet1
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Hydro Operations amp Maintenance | 59025 | 59438 | 99 | In line with budget | |||||
| Hydro Fish amp Wildlife | 14274 | 16751 | 85 | Deferral of planned projects to 2019 | |||||
| Hydro Parks amp Recreation | 7662 | 7730 | 99 | In line with budget | |||||
| Electric Distribution | 14487 | 15398 | 94 | Underground line and substation maint | |||||
| Electric Transmission | 13065 | 13221 | 99 | In line with budget | |||||
| Misc Power Supply Expenses | 3967 | 5317 | 75 | Legal and Consulting support EPampT | |||||
| Water amp Wastewater | 2894 | 3102 | 93 | Small dollar variance | |||||
| Fiber Network | 4247 | 4580 | 93 | Premise devise maint | |||||
| Customer Accounts amp Service | 3979 | 3999 | 100 | In line with budget | |||||
| Conservation amp Customer Assist | 2783 | 3459 | 80 | Regulatory asset amortization | |||||
| Insurance amp FERC Fees | 8252 | 8670 | 95 | Self insurance stop loss | |||||
| Other Admin amp General | 29136 | 32497 | 90 | Pension expense adjustment | |||||
| Total | 163773 | 174161 | 94 |
Non-Operating Activity
2192019 29
(in 000s) Actuals 2018Budget 2018 Variance
Interest Earnings 11525 9249 125 Higher interest rates cash balance
Capital Contributions 5934 5280 112 High volume of line extensions
Interest Expense (25202) (25402) 99 In line with budget
Other Inc(Exp) (4159) (3809) 109 Small dollar variance
Non Operating Activity (11901) (14682) 81
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
Cognos_Office_Connection_Cache
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
Sheet1
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Interest Earnings | 11525 | 9249 | 125 | Higher interest rates cash balance | |||||
| Capital Contributions | 5934 | 5280 | 112 | High volume of line extensions | |||||
| Interest Expense | (25202) | (25402) | 99 | In line with budget | |||||
| Other Inc(Exp) | (4159) | (3809) | 109 | Small dollar variance | |||||
| Non Operating Activity | (11901) | (14682) | 81 |
Integrated Electric
2192019 30
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 50352 50753 99 In line with budget
Net Wholesale Revenue 106765 108001 99 In line with budget
Hydro LT Contract RevOther PP 136860 119795 114 Lower operating costs amp contract adders
Other Operating Revenue 27254 22280 122 FEMA proceeds (fire 2015) Var RTA
Other Operating Expense (158893) (167940) 95 Actuarial reduction in pension expense
Depreciation amp Tax Expense (46996) (46219) 102 In line with budget
Operating Income(Loss) 115343 86670 133
Non-Operating Activity (16544) (18190) 91 Interest earnings on higher cash balances
Bottom Line 98799 68480
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
Cognos_Office_Connection_Cache
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
Sheet1
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 50352 | 50753 | 99 | In line with budget | |||||
| Net Wholesale Revenue | 106765 | 108001 | 99 | In line with budget | |||||
| Hydro LT Contract RevOther PP | 136860 | 119795 | 114 | Lower operating costs amp contract adders | |||||
| Other Operating Revenue | 27254 | 22280 | 122 | FEMA proceeds (fire 2015) Var RTA | |||||
| Other Operating Expense | (158893) | (167940) | 95 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (46996) | (46219) | 102 | In line with budget | |||||
| Operating Income(Loss) | 115343 | 86670 | 133 | ||||||
| Non-Operating Activity | (16544) | (18190) | 91 | Interest earnings on higher cash balances | |||||
| Bottom Line | 98799 | 68480 |
Fiber amp Telecom
2192019 31
(in 000s)Actuals
2018Budget
2018 Variance
Service Revenue 10659 10897 98 In line with budget
Other Operating Revenue 12 1 981 Small dollar variance
Other Operating Expense (5810) (6730) 86 Actuarial reduction in pension expense
Depreciation amp Tax Expense (3092) (3133) 99 In line with budget
Operating Income(Loss) 1768 1034 171
Non-Operating Activity 2969 2805 106 Small dollar variance
Bottom Line 4738 3839
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
Cognos_Office_Connection_Cache
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
Sheet1
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 10659 | 10897 | 98 | In line with budget | |||||
| Other Operating Revenue | 12 | 1 | 981 | Small dollar variance | |||||
| Other Operating Expense | (5810) | (6730) | 86 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (3092) | (3133) | 99 | In line with budget | |||||
| Operating Income(Loss) | 1768 | 1034 | 171 | ||||||
| Non-Operating Activity | 2969 | 2805 | 106 | Small dollar variance | |||||
| Bottom Line | 4738 | 3839 |
Water
2192019 32
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 6200 6239 99 In line with budget
Other Operating Revenue 73 62 117 Small dollar variance
Other Operating Expense (3584) (3739) 96 Actuarial reduction in pension expense
Depreciation amp Tax Expense (2356) (2376) 99 In line with budget
Operating Income(Loss) 333 186 179
Non-Operating Activity 1495 530 282 Customer contributions
Bottom Line 1827 716
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
Cognos_Office_Connection_Cache
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
Sheet1
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 6200 | 6239 | 99 | In line with budget | |||||
| Other Operating Revenue | 73 | 62 | 117 | Small dollar variance | |||||
| Other Operating Expense | (3584) | (3739) | 96 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (2356) | (2376) | 99 | In line with budget | |||||
| Operating Income(Loss) | 333 | 186 | 179 | ||||||
| Non-Operating Activity | 1495 | 530 | 282 | Customer contributions | |||||
| Bottom Line | 1827 | 716 |
Wastewater
2192019 33
(in 000s)Actuals
2018Budget 2018 Variance
Service Revenue 724 701 103 Small dollar variance
Other Operating Revenue 3 2 152 Small dollar variance
Other Operating Expense (722) (864) 83 Actuarial reduction in pension expense
Depreciation amp Tax Expense (283) (288) 98 In line with budget
Operating Income(Loss) (278) (450) 62
Non-Operating Activity 179 173 103 In line with budget
Bottom Line (99) (277)
Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
Cognos_Office_Connection_Cache
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
Sheet1
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
| (in 000s) | Actuals 2018 | Budget 2018 | Variance | ||||||
| Service Revenue | 724 | 701 | 103 | Small dollar variance | |||||
| Other Operating Revenue | 3 | 2 | 152 | Small dollar variance | |||||
| Other Operating Expense | (722) | (864) | 83 | Actuarial reduction in pension expense | |||||
| Depreciation amp Tax Expense | (283) | (288) | 98 | In line with budget | |||||
| Operating Income(Loss) | (278) | (450) | 62 | ||||||
| Non-Operating Activity | 179 | 173 | 103 | In line with budget | |||||
| Bottom Line | (99) | (277) |
34
Actual Cash Balance Comparison to Budget
(millions) 2018
Total Cash ndash Budgeted year-end balance $ 436
Key changes in cash forecast
Decrease in capital projects $52
Improvement in operating activity $ 32
Other changes in AR AP inventory etc $9
Alcoa deferred contract payment $62
Total Cash ndash Actual year-end balance $ 591
Prior quarter ndash 2018 year-end forecasted balance $ 574
2192019
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates
- Debt Reduction Charge (DRC) - 3 (2019-23)- Capital Recovery Charge (CRC) - 50 (2019-23)
bull Investment earning ratebull (2019-23 248 265 282 304 322)
2192019 35
Five-year outlook
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
36
Cash and Debt Funding CapacityForecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Cash Funding Capacity $248M $152M $57M $12M $28M
ldquoliquidity in excess of minimum $175M targetrdquo
Debt Funding Capacity $104M $174M $245M $287M $320M
ldquofinancing capability up to maximum debt ratio target of 35rdquo
Total Funding Capacity $352M $326M $302M $299M $348M
Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
37
Combined Five-Year Forecast
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Service Revenue 68787 72553 76125 77145 78122
Net Wholesale Revenue 100945 90046 85720 87980 94421
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Other Operating Revenue 23840 22217 21314 22996 22359
Other Operating Expense (186203) (195268) (184124) (189738) (199073)
Depreciation amp Tax Expense (53196) (58354) (62581) (67024) (70659)
Operating Income(Loss) 87669 68552 66899 65350 64323
Non-Operating Activity (10404) (11539) (11893) (13027) (12364)
Bottom Line 77265 57014 55006 52323 51959
Prior Quarter Reported Forecast 79244 61443 57292 55369 52679
Forecast at 2018 Budget 61167 49336 45912 40391 38604
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
Cognos_Office_Connection_Cache
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
Sheet1
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Other Operating Revenue | 23840 | 22217 | 21314 | 22996 | 22359 | ||||||
| Other Operating Expense | (186203) | (195268) | (184124) | (189738) | (199073) | ||||||
| Depreciation amp Tax Expense | (53196) | (58354) | (62581) | (67024) | (70659) | ||||||
| Operating Income(Loss) | 87669 | 68552 | 66899 | 65350 | 64323 | ||||||
| Non-Operating Activity | (10404) | (11539) | (11893) | (13027) | (12364) | ||||||
| Bottom Line | 77265 | 57014 | 55006 | 52323 | 51959 | ||||||
| Prior Quarter Reported Forecast | 79244 | 61443 | 57292 | 55369 | 52679 | ||||||
| Forecast at 2018 Budget | 61167 | 49336 | 45912 | 40391 | 38604 |
38
Service Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Residential Electric 27692 27900 28044 28172 28319
Commercial Electric 17029 17340 17513 17690 17861
Industrial Electric 5247 5246 5248 5248 5249
High Density Load 3135 5893 8784 9118 9269
Other Electric 1618 1619 1617 1622 1622
Electric Service 54722 57999 61205 61851 62320
Water Service 6142 6390 6648 6917 7196
Wastewater Service 734 756 778 802 826
Fiber amp Telecom 7190 7408 7493 7576 7780
Service Revenue 68787 72553 76125 77145 78122
Prior Quarter Reported Forecast 69512 72667 75404 76489 79065
Forecast at 2018 Budget 66840 69003 70957 72605 73946
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
Cognos_Office_Connection_Cache
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
Sheet1
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Residential Electric | 27692 | 27900 | 28044 | 28172 | 28319 | ||||||
| Commercial Electric | 17029 | 17340 | 17513 | 17690 | 17861 | ||||||
| Industrial Electric | 5247 | 5246 | 5248 | 5248 | 5249 | ||||||
| High Density Load | 3135 | 5893 | 8784 | 9118 | 9269 | ||||||
| Other Electric | 1618 | 1619 | 1617 | 1622 | 1622 | ||||||
| Electric Service | 54722 | 57999 | 61205 | 61851 | 62320 | ||||||
| Water Service | 6142 | 6390 | 6648 | 6917 | 7196 | ||||||
| Wastewater Service | 734 | 756 | 778 | 802 | 826 | ||||||
| Fiber amp Telecom | 7190 | 7408 | 7493 | 7576 | 7780 | ||||||
| Service Revenue | 68787 | 72553 | 76125 | 77145 | 78122 | ||||||
| Prior Quarter Reported Forecast | 69512 | 72667 | 75404 | 76489 | 79065 | ||||||
| Forecast at 2018 Budget | 66840 | 69003 | 70957 | 72605 | 73946 |
39
Net Surplus Energy Revenue
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023
Slice Contracts 70241 55181 55552 42393 29666
Net Block Trades 19482 24545 14603 19396 4284
Other Net Wholesale 11222 10321 15566 26191 60471
Net Wholesale Revenue 100945 90046 85720 87980 94421
LT Hydro Contracts 134816 138678 131765 135311 139813
Less Other Purchased Power (1320) (1320) (1320) (1320) (660)
Hydro LT Contract RevOther PP 133496 137359 130445 133991 139153
Surplus Energy Revenue 234441 227405 216165 221971 233574
Prior Quarter Reported Forecast 237907 226048 216192 220923 229077
Forecast at 2018 Budget 225395 214123 205621 207544 208406
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
Cognos_Office_Connection_Cache
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
Sheet1
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Slice Contracts | 70241 | 55181 | 55552 | 42393 | 29666 | ||||||
| Net Block Trades | 19482 | 24545 | 14603 | 19396 | 4284 | ||||||
| Other Net Wholesale | 11222 | 10321 | 15566 | 26191 | 60471 | ||||||
| Net Wholesale Revenue | 100945 | 90046 | 85720 | 87980 | 94421 | ||||||
| LT Hydro Contracts | 134816 | 138678 | 131765 | 135311 | 139813 | ||||||
| Less Other Purchased Power | (1320) | (1320) | (1320) | (1320) | (660) | ||||||
| Hydro LT Contract RevOther PP | 133496 | 137359 | 130445 | 133991 | 139153 | ||||||
| Surplus Energy Revenue | 234441 | 227405 | 216165 | 221971 | 233574 | ||||||
| Prior Quarter Reported Forecast | 237907 | 226048 | 216192 | 220923 | 229077 | ||||||
| Forecast at 2018 Budget | 225395 | 214123 | 205621 | 207544 | 208406 |
40
Operating Expense
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Hydro Operations amp Maintenance 66605 67763 54601 57015 60615 Hydro Fish amp Wildlife 16212 19661 20634 19478 20157 Hydro Parks amp Recreation 7493 10362 7826 8133 8316 Electric Distribution 16290 16709 17455 18086 18600 Electric Transmission 14458 13785 13724 14269 15271 Misc Power Supply Expenses 4933 5559 5554 5764 5980 Water amp Wastewater 3191 3327 3401 3516 3715 Fiber Network 5228 4510 4947 5018 5015 Customer Accounts amp Service 3807 5034 5205 5363 5555 Conservation amp Customer Assist 4452 4177 4665 4895 5209 Insurance amp FERC Fees 8472 8775 9086 9374 9579 Other Admin amp General 35062 35605 37028 38827 41061
Total 186203 195268 184124 189738 199073
Prior Quarter Reported Forecast 187330 191531 183210 188919 198213
Forecast at 2018 Budget 177987 179203 175644 180961 188439
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
Cognos_Office_Connection_Cache
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
Sheet1
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Hydro Operations amp Maintenance | 66605 | 67763 | 54601 | 57015 | 60615 | ||||||
| Hydro Fish amp Wildlife | 16212 | 19661 | 20634 | 19478 | 20157 | ||||||
| Hydro Parks amp Recreation | 7493 | 10362 | 7826 | 8133 | 8316 | ||||||
| Electric Distribution | 16290 | 16709 | 17455 | 18086 | 18600 | ||||||
| Electric Transmission | 14458 | 13785 | 13724 | 14269 | 15271 | ||||||
| Misc Power Supply Expenses | 4933 | 5559 | 5554 | 5764 | 5980 | ||||||
| Water amp Wastewater | 3191 | 3327 | 3401 | 3516 | 3715 | ||||||
| Fiber Network | 5228 | 4510 | 4947 | 5018 | 5015 | ||||||
| Customer Accounts amp Service | 3807 | 5034 | 5205 | 5363 | 5555 | ||||||
| Conservation amp Customer Assist | 4452 | 4177 | 4665 | 4895 | 5209 | ||||||
| Insurance amp FERC Fees | 8472 | 8775 | 9086 | 9374 | 9579 | ||||||
| Other Admin amp General | 35062 | 35605 | 37028 | 38827 | 41061 | ||||||
| Total | 186203 | 195268 | 184124 | 189738 | 199073 | ||||||
| Prior Quarter Reported Forecast | 187330 | 191531 | 183210 | 188919 | 198213 | ||||||
| Forecast at 2018 Budget | 177987 | 179203 | 175644 | 180961 | 188439 |
41
Capital Projects
2192019
(in 000s)Forecast
2019Forecast
2020Forecast
2021Forecast
2022Forecast
2023Electric Distribution 22864 30966 31617 26381 23444 Network Transmission 3958 8132 8333 5985 1931 Rocky Reach 5801 9210 6038 8966 9177 Rock Island 76139 52324 40982 35409 31944 Lake Chelan 111 1429 855 435 570 Internal Services 34956 41697 54425 43000 2733 Fiber amp Telecom 7398 5139 4576 5553 4913 Water 1068 3309 1326 2258 2302 Wastewater 3577 926 927 72 74 Total 155871 153132 149078 128060 77088
Prior Quarter Reported Forecast 152339 157552 138783 134492 77760
Forecast at 2018 Budget 121762 98011 111697 102456 94577
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
Cognos_Office_Connection_Cache
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
Sheet1
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
| (in 000s) | Forecast 2019 | Forecast 2020 | Forecast 2021 | Forecast 2022 | Forecast 2023 | ||||||
| Electric Distribution | 22864 | 30966 | 31617 | 26381 | 23444 | ||||||
| Network Transmission | 3958 | 8132 | 8333 | 5985 | 1931 | ||||||
| Rocky Reach | 5801 | 9210 | 6038 | 8966 | 9177 | ||||||
| Rock Island | 76139 | 52324 | 40982 | 35409 | 31944 | ||||||
| Lake Chelan | 111 | 1429 | 855 | 435 | 570 | ||||||
| Internal Services | 34956 | 41697 | 54425 | 43000 | 2733 | ||||||
| Fiber amp Telecom | 7398 | 5139 | 4576 | 5553 | 4913 | ||||||
| Water | 1068 | 3309 | 1326 | 2258 | 2302 | ||||||
| Wastewater | 3577 | 926 | 927 | 72 | 74 | ||||||
| Total | 155871 | 153132 | 149078 | 128060 | 77088 | ||||||
| Prior Quarter Reported Forecast | 152339 | 157552 | 138783 | 134492 | 77760 | ||||||
| Forecast at 2018 Budget | 121762 | 98011 | 111697 | 102456 | 94577 |
Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124
COMBINED 2019 2020 2021 2022 2023
District Total Liquidity Targets $190 $191 $193 $184 $200
Base Case ndash expected (50 probability) $423 $327 $232 $187 $202
Base Case ndash unusual (10 prob cumulative) $419 $316 $214 $186 $201
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $308 $197 $184 $200
Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250
Base Case ndash expected (50 probability) 591 455 342 269 283
Base Case ndash unusual (10 prob cumulative) 585 440 315 267 282
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 416 280 255 268
2192019 42 Assumes external debt financing to maintain liquidity targets
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
Financial Policy ndash Debt Ratio(Debt(Debt + Equity))
COMBINED 2019 2020 2021 2022 2023
District Targets lt35 lt35 lt35 lt35 lt35
Outstanding Debt Balance - YE(million) $475 $436 $395 $381 $375Scheduled Debt Retirements (million) $25 $28 $30 $32 $33
Planned Debt Accelerations (million) $16 $11 $12 $12 $13
Forecasted Debt Issuance - expected (million) $3 $- $1 $30 $42
Base Case ndash expected 306 278 249 235 225
Base Case ndash unusual 307 280 252 252 254
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 280 256 272 286
2192019 43 Assumed debt issuance to maintain adequate liquidity levels Assumed small public works trust fund debt related to Peshastin Wastewater work
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) 200 200 200 200 200
District Targets (unusual) 125 125 125 125 125
Base Case ndash expected 287 253 251 247 241
Base Case ndash unusual 278 241 236 221 194
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 232 224 196 160
2192019 44
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)
COMBINED 2019 2020 2021 2022 2023
District Targets (expected) gt4Sunset
District Targets (unusual) gt2
Base Case ndash expected Bottom-line expectation
62$77M
-$57M
-$55M
-$52M
-$52M
Base Case ndash unusualBottom-line expectation
58$73M
-$51M
-$47M
-$43M
-$32M
ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation
-$46M
-$41M
-$31M
-$13M
2192019 45
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
2192019 43
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
2192019 44
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
2192019 45
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
492192019
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
502192019
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
$(20)
$5
$30
$55
$80
$105
2013 2014 2015 2016 2017 2018
Bottom-Line
Review of the Districtrsquos Past Financial Results(amounts in millions)
2192019 51
Wholesale market lt $35MWh
Above average water Belowaverage water
Above average water
Wholesale market lt $35MWhWholesale market
lt $25MWh
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-
Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
2192019 52
32 32 32 32 32 32
-
1
2
3
4
5
2013 2014 2015 2016 2017 2018
Residential Energy RateNo rate change
Residential Energy Rate ComparisonsUS - 127cent Washington 91cent
(2015 ndash Energy Information Administration)
- Quarterly Financial Review
- What we will cover today
- 2018 Key Highlights
- Overview - 2018
- Overview - 2018
- Financial Highlights -2018Focus on 2018 cost per unit
- Financial Highlights-2018Focus on 2018 cost per unit
- Slide Number 8
- Slide Number 9
- Slide Number 10
- Slide Number 11
- Slide Number 12
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Historical Review of the Districtrsquos Financial Results(amounts in millions)
- Slide Number 15
- Slide Number 16
- Slide Number 17
- Slide Number 18
- Slide Number 19
- 2018 Summary
- Slide Number 21
- Financial Highlights - Revenue
- Financial Highlights - Revenue
- Financial Highlights - Expenses
- Slide Number 25
- Slide Number 26
- Slide Number 27
- Slide Number 28
- Slide Number 29
- Slide Number 30
- Slide Number 31
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
- Slide Number 49
- Slide Number 50
- Review of the Districtrsquos Past Financial Results(amounts in millions)
- Historic Review of the Districtrsquos Financial ResultsSix Years Without Overall Rate Increase
-