Staff Report Item 13
Staff Report Item 13
TO: Ava Community Energy Authority Board of Directors
FROM: Nick Chaset, CEO
SUBJECT: Draft Ava Budget Fiscal Year 2024-2025 (Informational Item) DATE: May 15, 2024
__________________________________________________________________ Recommendation
Receive and review the draft budget for fiscal year 2024-2025.
Background and Discussion
Ava’s fiscal year is from July 1 through June 30. Staff is presenting a proposed draft budget for fiscal year 2024-2025.
This budget presents changes to Ava’s value proposition by recommending an increase from 5% to 7% discount relative to PG&E rates for Ava’s Bright Choice product with no recommended change to the premium of the Renewable 100 product, which is currently at $0.0025.
This budget also presents a large net position surplus as a base-case scenario. Staff is recommending a method to manage this surplus to increase Ava’s value to the community through four processes:
1. Significant contributions to reserves to ensure agency solvency in the event of possible risk contingencies
2. Increase value proposition customer discount and establish on-bill credits as levels of net position surplus are realized through the year
3. Increase in carbon free energy procurement with short and long-term investments
4. Meaningful increases to Local Development programs
This presented budget is based on feedback from a draft version presented at the Executive Committee on May 1, 2024 and the Finance, Administrative, and Procurement subcommittee on May 8,2024. The budget outlines staff’s best expected estimates for costs and revenues anticipated for the next fiscal year based on load, market prices, and PCIA charges. Due to Staff Report Item 13
these updates, the numbers in this draft may differ slightly from those presented at the other meetings.
FY 2025 FY 2024 FY 2024
BUDGET BUDGET ACTUALS
OPERATING ACTIVITY
REVENUE & OTHER SOURCES
Electricity Sales A1 979,017,000 957,028,000 927,102,000 Uncollectables A2 (9,790,000) (12,095,000) (11,675,000) Other Operating Revenue A3 (6,487,000) (6,642,000) 8,446,000 TOTAL OPERATING REVENUE 962,740,000 938,291,000 923,873,000
EXPENSES & OTHER USES
Cost of Energy 753,523,000 682,367,000 671,654,000
Cost of Energy Services 11,608,000 11,219,000 11,213,000 Total Energy Operating Expenses 765,131,000 693,586,000 682,867,000 Overhead Operating Expenses
Personnel D1 26,592,000 21,911,000 18,015,000
Marketing & Communications D2 6,168,000 5,303,000 3,046,000 Legal, Policy, & Regulatory Affairs D3 4,104,000 3,509,000 2,175,000 Other Professional Services D4 2,088,000 2,505,000 1,790,000 General & Administrative D5 5,868,000 5,711,000 4,488,000 Depreciation D6 399,000 360,000 213,000
Total Overhead Operating Expenses 45,219,000 39,299,000 29,727,000 TOTAL OPERATING EXPENSES 810,350,000 732,885,000 712,594,000
NON-OPERATING ACTIVITY
NON-OPERATING REVENUE
Interest Income A4 11,400,000 1,680,000 7,762,000
Grants A5 350,000 0 677,000
Other Non-Operating Revenue A6 49,000 48,000 49,000
TOTAL NON-OPERATING REVENUE 11,799,000 1,728,000 8,488,000
NON-OPERATING EXPENSES
Borrowing Interest E1 2,796,000 1,650,000 950,000
Local Development Funding E2 22,400,000 25,500,000 25,500,000 Total Capital Expenditures 100,000 500,000 0
TOTAL NON-OPERATING EXPENSES 25,296,000 27,650,000 26,450,000 NET NON-OPERATING POSITION (13,497,000) (25,922,000) (17,962,000) TOTAL REVENUES 974,539,000 940,019,000 932,361,000
TOTAL EXPENSES 835,646,000 760,535,000 739,044,000
TOTAL NET REVENUES 138,893,000 179,484,000 193,317,000
Staff Report Item 13
Fiscal Impact
This establishes the forecast of Ava’s fiscal position for the next 12 months with a positive net position.
Attachments
A. Presentation of the Draft Ava Budget FY 2024-2025
Fiscal Year 2024-2025
Draft Budget
Board of Directors
May 15, 2024
Attachment Staff Report Item 13A
Background & Discussion
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Attachment Staff Report Item 13A
How Ava Works—Energy Delivery
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Attachment Staff Report Item 13A
How Ava Works—Revenues & Rates
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0 0.02
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0.08 0.1
0.12 0.14
0.16 2019 2020 2021 2022 2023 2024 2025
$/kWh
Fiscal Year
Customer Rate Revenue Profile
Ava Average Rates PCIA Fees Cost of Service Margin
Attachment Staff Report Item 13A
How Ava Works—Billing Cycle
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Attachment Staff Report Item 13A
How Ava Works—Revenues & Rates
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BC%
Retail MWh
Bright Choice as Percent of Retail Load by Year
BC-Res BC-C&I R100-Res R100-C&I BC%
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Attachment Staff Report Item 13A
Executive Budget Summary
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Attachment Staff Report Item 13A
Summary Draft Budget Fiscal Year 2024-2025
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FY 2025 FY 2024 FY 2024
BUDGET BUDGET ACTUALS
OPERATING ACTIVITY
REVENUE & OTHER SOURCES
Electricity Sales 979,017,000 957,028,000 927,102,000
Uncollectables (9,790,000) (12,095,000) (11,675,000)
Other Operating Revenue (6,487,000) (6,642,000) 8,446,000 TOTAL OPERATING REVENUE 962,740,000 938,291,000 923,873,000
EXPENSES & OTHER USES
Cost of Energy 753,523,000 682,367,000 671,654,000
Cost of Energy Services 11,608,000 11,219,000 11,213,000 Total Energy Operating Expenses 765,131,000 693,586,000 682,867,000 Total Overhead Operating Expenses 45,219,000 39,299,000 29,727,000 TOTAL OPERATING EXPENSES 810,350,000 732,885,000 712,594,000 NET OPERATING POSITION 152,390,000 205,406,000 211,279,000
NON-OPERATING ACTIVITY
TOTAL NON-OPERATING REVENUE 11,799,000 1,728,000 8,488,000 TOTAL NON-OPERATING EXPENSES 25,296,000 27,650,000 26,450,000 NET NON-OPERATING POSITION (13,497,000) (25,922,000) (17,962,000) TOTAL REVENUES 974,539,000 940,019,000 932,361,000
TOTAL EXPENSES 835,646,000 760,535,000 739,044,000
TOTAL NET REVENUES 138,893,000 179,484,000 193,317,000
Attachment Staff Report Item 13A
Draft Budget Base Case Assumptions
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Attachment Staff Report Item 13A
Carbon Free Procurement Schedule
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Year Path Target Increase Updated Target Increase Updated Target Increase Updated Target 2022 63% 5% 68% -- -- -- --
2023 66% 5% 71% 5% 76% -- --
2024 71% 0% 71% 10% 81% 0% 81%
2025 76% 0% 76% 0% 76% 5% 81%
2026 81% 0% 81% 0% 81% 0% 81%
2022 2023 2024
Attachment Staff Report Item 13A
Reserve Amounts & Proposed Surplus Allocations
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Contribution Year Contribution Withdraws Balance OpEx to Cover PctOps 2018-2019 40,513,687 40,513,687 - 410,686,000 9.9%
2019-2020 49,704,640 90,218,327 - 383,045,000 23.6%
2020-2021 - - 90,218,327 471,897,000 19.1%
2021-2022 65,655,073 155,873,400 - 562,667,000 27.7%
2022-2023 75,000,000 230,873,400 - 732,885,000 31.5%
2023-2024 100,000,000 330,873,400 - 810,350,000 40.8%
2024-2025* 100,000,000 - 430,873,400 1,003,221,000 42.9% *Proposed contribution with projected operating expenses to cover as of 5/8/2024
WATERFALL DISTRIBUTION
Net Revenues 138,893,000
Working Capital 0
Reserve Contribution 100,000,000
Available for Allocation 38,893,000
On-Bill Credit 50% 19,446,500
Solar/Storage NBT Incentives 50% 19,446,500
Attachment Staff Report Item 13A
Draft Budget: Operating Revenues
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FY 2025 FY 2024 FY FY FY 2024
BUDGET BUDGET Delta %D ACTUALS
OPERATING ACTIVITY
REVENUE & OTHER SOURCES
Electricity Sales 979,017,000 957,028,000 21,989,000 2.2% 927,102,000 Uncollectables (9,790,000) (12,095,000) 2,305,000 -23.5% (11,675,000) Other Operating Revenue (6,487,000) (6,642,000) 155,000 -2.4% 8,446,000 TOTAL OPERATING REVENUE 962,740,000 938,291,000 24,449,000 2.5% 923,873,000 Attachment Staff Report Item 13A
Draft Budget: Overview of Operating Expenses
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FY 2025
BUDGET % Cost
EXPENSES & OTHER USES
Cost of Energy 753,523,000 90.2%
Cost of Energy Services 11,608,000 1.4%
Total Energy Operating Expenses 765,131,000 91.6%
Overhead Operating Expenses
Personnel 26,592,000 3.2%
Marketing & Communications 6,168,000 0.7%
Legal, Policy, & Regulatory Affairs 4,104,000 0.5%
Other Professional Services 2,088,000 0.2%
General & Administrative 5,868,000 0.7%
Depreciation 399,000 0.0%
Total Overhead Operating Expenses 45,219,000 5.4%
TOTAL OPERATING EXPENSES 810,350,000
NON-OPERATING EXPENSES
Borrowing Interest 2,796,000 0.3%
Local Development Funding 22,400,000 2.7%
Total Capital Expenditures 100,000 0.0%
TOTAL NON-OPERATING EXPENSES 25,296,000 3.0%
TOTAL EXPENSES 835,646,000
Attachment Staff Report Item 13A
Draft Budget: Energy Expenses
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FY 2025 FY 2024 FY 2024
BUDGET BUDGET ACTUALS
EXPENSES & OTHER USES
Cost of Energy 753,523,000 682,367,000 658,262,000
Cost of Energy Services 11,608,000 11,219,000 11,213,000 Total Energy Operating Expenses 765,131,000 693,586,000 669,475,000 PPAs Hedges Open Capacity RECs Carbon Free
FY 2025 Budget to FY 2024 Actuals by Cost Element
FY 2025 FY 2024
Attachment Staff Report Item 13A
Draft Budget: Overhead Expenses
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FY 2025 FY 2024 FY 2024
BUDGET BUDGET ACTUALS
EXPENSES & OTHER USES
Overhead Operating Expenses
Personnel D1 26,592,000 21,911,000 18,015,000
Marketing & Communications D2 6,168,000 5,303,000 3,046,000 Legal, Policy, & Regulatory Affairs D3 4,104,000 3,509,000 2,175,000 Other Professional Services D4 2,088,000 2,505,000 1,790,000 General & Administrative D5 5,868,000 5,711,000 4,488,000 Depreciation D6 399,000 360,000 213,000
Total Overhead Operating Expenses 45,219,000 39,299,000 29,727,000 Attachment Staff Report Item 13A
Draft Budget: Personnel
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FY 2025 FY 2024 FY 2023
DRAFT BUDGET BUDGET BUDGET
PERSONNEL
Salaries & Wages 19,765,000 16,587,000 11,598,000
Retirement 2,450,000 2,058,000 1,544,000
Health Care/Benefits 3,961,000 2,913,000 2,292,000
Payroll Expenses 416,000 353,000 277,000
Total 26,592,000 21,911,000 15,711,000
Attachment Staff Report Item 13A
Draft Budget: New Personnel Assignments
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Title Functional Area
1 Controller Finance
2 Structured Finance Manager Finance
3 HR Operations Manager Human Resources
4 Contracts Manager Local Development
5 DCFC Product Manager Local Development
6 Project Manager Local Development
7 Strategic Accounts and Product Designer Local Development 8 Marketing Associate Marketing
9 Outreach Coordinator Marketing
10 Contract Manager Power Resources
11 Contracts Analyst Power Resources
12 RA Portfolio Analyst Power Resources
13 Settlements Analyst Power Resources
14 Assistant Board Clerk Public Policy & Legal
15 Regulatory Analyst Public Policy & Legal
Attachment Staff Report Item 13A
Draft Budget: Non-Operating Activity
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FY 2025 FY 2024 FY 2024
BUDGET BUDGET ACTUALS
NON-OPERATING ACTIVITY
NON-OPERATING REVENUE
Interest Income 11,400,000 1,680,000 7,762,000
Grants 350,000 0 677,000
Other Non-Operating Revenue 49,000 48,000 49,000
TOTAL NON-OPERATING REVENUE 11,799,000 1,728,000 8,488,000
NON-OPERATING EXPENSES
Borrowing Interest 2,796,000 1,650,000 950,000
Local Development Funding 22,400,000 25,500,000 25,500,000 Total Capital Expenditures 100,000 500,000 0
TOTAL NON-OPERATING EXPENSES 25,296,000 27,650,000 26,450,000 NET NON-OPERATING POSITION (13,497,000) (25,922,000) (17,962,000) Attachment Staff Report Item 13A
Draft Budget: Local Development
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FY 2025 FY 2024
DRAFT BUDGET BUDGET
Critical Municipal Facilities 7,000,000 -
Health-e-Communities 5,000,000 5,000,000
DCFC Network 3,000,000 3,600,000
Ava e-Bike 2,000,000 2,000,000
Building Electrification 2,000,000 3,500,000
Community Grants 1,200,000 1,400,000
Vehicle Electrification 1,000,000 6,000,000
Legal Expense 500,000 -
Solar + Storage 2,000,000 500,000
Subscription 200,000 -
Demand Response - 2,000,000
Total 22,400,000 25,500,000
Potential to S+S* 19,446,000 22,683,000
Estimated with Surplus 41,846,000 48,183,000
*Estimated amounts from surplus net revenues waterfall allocations Attachment Staff Report Item 13A
Thank you!
Attachment Staff Report Item 13A