Finance & Risk
Management
Committee
Meeting
July 7, 2022
Welcome
Roll Call
Public Comment for
items Not on the Agenda
Items to be Added,
Withdrawn or Reordered
on the Agenda
REGULAR AGENDA
1. Report on Treasurer’s Report
for Period Ending 5/30/22
2. Review and Recommendation
on Budget Policy
3. Review and Recommendation
on VAMO Election
Committee Member
Announcements
Adjournment
Regular
Meeting
Agenda
3 Item 1
Treasurer’s Report for Period Ending 5/30/22
Recommendation: Receive and File Treasurer’s
Report for Period Ending 5/30/22
Presenter:
Dr. Eric Washington,
Chief Financial Officer
4 Results for the period were in line compared to the
amended budget:
• Net operating revenues 1.1% under budget due
to another billing timing differential expected to
be resolved next reporting period.
• Operating expenses came in 4.0 percentage
points under the budgeted amount
Financial results for the YTD FY22:
• $304.24M in net operating revenues
• $290.34M in total expenses (includes energy
costs of $281.96M or 95% of net revenues)
• $8.90M change in YTD net position
Item 1: Treasurer’s Report
YTD FY22 Budget v. Actual
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY22 Results v. Budget
YTD FY22 as of 5/30/22 (11 mos) FY22 YTD Budget
Budget Comparison
YTD FY22 as of
5/30/22 (11 mos)
FY22 YTD
Budget
Budget
Variance ($) Budget (%)
Net Operating Revenues $ 304,238,197 $ 307,514,491 $ (3,276,294) 99 Total Expenses $ 290,388,336 $ 302,565,570 $ (12,177,234) 96 Change in Net Position $ 13,849,861 $ 4,948,921 $ 8,900,940 5 Item 1: Treasurer’s Report
Year-to-date financial results compared
to projections:
• Net operating revenues were in-line
with proforma projections
• Total expenses were 1.2% under
the proforma projections
• Change in net position was $3.34M
over the projected
YTD FY22 Proforma v. Actual
Proforma Comparison
YTD FY22 as of
5/30/22 (11 mos)
FY22 YTD
ProForma
ProForma
Variance ($) Proforma (%)
Net Operating Revenues $ 304,238,197 $ 304,433,522 $ (195,325) -0.06% Total Expenses $ 290,388,336 $ 293,927,823 $ (3,539,487) -1.20% Change in Net Position $ 13,849,861 $ 10,505,699 $ 3,344,162 31.83% $-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
Net Operating Revenues Total Expenses Change in Net Position YTD FY22 Results v. Proforma
YTD FY22 as of 5/30/22 (11 mos) FY22 YTD ProForma
6 Item 1
Treasurer’s Report for Period Ending 5/30/22
Recommendation: Receive and File Treasurer’s
Report for Period Ending 5/30/22
Presenter:
Dr. Eric Washington,
Chief Financial Officer
7 Item 2
Review and Recommendation on Budget Policy
Recommendation:
Recommend that the Board of Directors approve the Budget Policy.
Presenter:
Dr. Eric Washington, Chief Financial Officer
8 7.3.1 Budget. The initial budget shall
be approved by the Board. The Board
may revise the budget from time to time
as may be reasonably necessary to
address contingencies and unexpected
expenses. All subsequent budgets of
SDCP shall be prepared and approved
by the Board in accordance with its
fiscal management policies that
should include a deadline for
approval
.
Budget Policy Background
9 Budget Policy
Predictable Timeline • Set timeline for the Board, the public and other interested parties to provide feedback.
• Leads to more informed and robust budget.
Policy Goals:
Day-to-Day Operations • Authority for minor day-to-day budget changes. • Board doesn’t need to review small movements.
Realignment Flexibility • Allows changes due to realignment of priorities and to meet actual operating needs.
• Helps year-end closing process.
Preserves Board Authority
• Adjustments over 10% require Board approval.
• CEO discretion to still require Board approval for
any budget changes under discretion of Policy.
Budget Preparation
Timeline
CFO to Board
CFO shall submit to Board the draft proposed
budget two months prior to fiscal year. The
budget shall be approved one month prior to
fiscal year.
Transfers within
Categories
Delegation to CEO/CFO
Delegates authority to CEO and CFO to make
expense transfers between line items within
budget level 2 categories, provided expense
appropriation for budget level 2 category
remains the same.
Transfers between
Categories
Delegation to CEO
Delegates authority to CEO for transfers
between budget level 2 categories, provided
that expense transfers do not exceed 10% of
original appropriation.
Supplemental
Revenue
Delegation to CEO
Delegates authority to CEO to allocate
additional revenue that is less than 10% of
original net operating revenue.
Balanced Budget
CFO to Board
SDCP shall maintain a balanced budget in
which projected revenues are greater than or
equal to total projected expenditures.
Revenue Changes • CEO discretion to adjust budget for fluctuations. • Ability to accept and expend additional, small
funds such as grants.
10 Budget Policy - Timeline
Budget Preparation
Timeline
CFO to Board
CFO shall submit to Board the draft proposed
budget two months prior to fiscal year. The
budget shall be approved one month prior to
fiscal year.
• Budget preparation timelines
will follow the timeline set in
the FY23 budget.
• Requires two public
hearings through the Board.
11 Budget Policy – Transfers within Categories
Transfers within
Categories
Delegation to CEO/CFO
Delegates authority to CEO and CFO to make
expense transfers between line items within
budget level 2 categories, provided expense
appropriation for budget level 2 category
remains the same.
Budget Level 2,
$M
FY23
Budget
Cost of Energy 661.6
Professional Services 16.9
Personnel 8.0
Marketing and
Outreach 4.2
General and Admin. 2.6
Programs 1.4
Interest and Related
Exp. 1.3
Total 695.9
Within, Professional
Services and Consultants
budget level 2 category, the
CFO may authorize
$2,000,000 move from the
Data Management to the
Technical Support budget
level 3 categories, provided
that the total Professional
Services and Consultants
budget level 2 category
remains the same.
Budget Level 3,
$M
FY23
Budget
FY23
Amended
Data Management 10.5 8.5
SDG&E Fees 2.6 2.6
Technical Support 1.3 3.3
Legal/Regulatory 1.3 1.3
Other Services 1.1 1.1
Total Professional
Services 16.9 16.9
Example:
12 Budget Policy – Transfers between Categories
Transfers between
Categories
Delegation to CEO
Delegates authority to CEO for transfers
between budget level 2 categories, provided
that expense transfers do not exceed 10% of
original appropriation.
The CEO may authorize
that up to $795,149.94
move from the Personnel
Costs to the Professional
Services and Consultants
category. Additional budget
movements above
$795,150 from the
Personnel Costs budget
level 2 category will require
approval by the Board.
Example: Budget Level 2,
$M
FY23
Budget
FY23
Amended % Change
Cost of Energy 661.6 661.6 0.0%
Professional Services 16.9 17.7 0.0%
Personnel 8.0 7.2 (10.0%)
Marketing and
Outreach 4.2 4.2 4.7%
General and Admin. 2.6 2.6 0.0%
Programs 1.4 1.4 0.0%
Interest and Related
Exp. 1.3 1.3 0.0%
Total 695.9 695.9 0.0%
13 Budget Policy – Supplemental Revenue
Supplemental
Revenue
Delegation to CEO
Delegates authority to CEO to allocate
additional revenue that is less than 10% of
original net operating revenue.
The CEO may authorize up
to $70,898,465 in FY23 in
additional net operating
revenue be appropriated.
The CEO may also
authorize increases to
budget level 2 categories
up to 10% of the original
budget for the budget level
2 category. Remaining net
operating revenue is
additional operating.
Example: Budget Level 2,
$M
FY23
Budget
FY23
Amended % Change
Gross Ratepayer Revenue 716.1 787.8 10.0%
Less Uncollectibles (7.2) (7.9) 10.0%
Net Operating Revenue 709.0 780.0 10.0%
Cost of Energy 661.6 727.8 10.0%
Professional Services 16.9 18.6 10.0%
Personnel 8.0 8.7 10.0%
Marketing and Outreach 4.2 4.6 10.0%
General and Admin. 2.6 2.9 10.0%
Programs 1.4 1.5 10.0%
Total Operating Expense 694.6 764.1 10.0%
Operating Income (Loss) 14.4 15.8 10.0%
14 Item 2
Review and Recommendation on Budget Policy
Recommendation:
Recommend that the Board of Directors approve the Budget Policy.
Presenter:
Dr. Eric Washington, Chief Financial Officer
Finance & Risk
Management
Committee
Meeting
Next Regular Meeting
August 4, 2022