The Turlock Irrigation District took the wraps off of its proposed 2014 budget Tuesday, projecting essentially flat spending and no base electric rate increases.
The proposed budget is, in large part, similar to a preliminary budget released a week ago, calling for the elimination of two unfilled positions and the use of $13 million in reserves.
But in a major change, the final draft calls for roughly $4 million less in electric operating revenues.
The district now projects $6 less in gas and oil revenues and a $2 million decline in wholesale wind revenues, offset by a $4 million increase in projected wholesale electric revenues. In all, electric operating revenues are now pegged at $368 million, down from $372 million a week ago.
In large part, the shifting revenue projections come as the district altered its forecast for the coming water year. While the earlier draft suggested the TID watershed would see 72 percent of normal rainfalls, this projection only estimates 63 percent of normal precipitation.
“It's a pretty conservative number,” said TID Board of Directors Chair Micheal Frantz.
That's because even if 2014 is exceptionally rainy, much of that water will be stored in Don Pedro Reservoir – not sent down the Tuolumne River, generating electricity as it passes through hydroelectric generators.
The lowered revenues are counterbalanced by a $4 million decline in power supply costs, to $272 million from $276 million.
Capital expenditures are expected to drop in many areas year-over-year, after costly one-time expenditures a year ago like a $5 million inspection of the Walnut Energy Center. In all, electric capitol expenditures are set to drop from $42 million in 2013 to $27 million in 2014.
The capital project plan does still call for some major new expenditures, however, headlined by the district's planned purchase of the Turlock Police Department, War Memorial, and Brandon Koch Memorial Skate Park. Following that purchase, TID would own the entire city block surrounding its Main Office Building, save for the old county court building.
“We are anticipating purchasing the City of Turlock property adjacent to us here,” said TID General Manager Casey Hashimoto. “That's to the tune of $2.6 million”
That's less than the $6.5 million previously discussed, as TID will postpone converting the buildings to district specifications. That effort was initially projected to cost roughly $4 million.
In total, capital expenditures are set to fall to $44.3 million, down from $48.4 million a year ago. That's also $13.1 million less than originally proposed – and less than the capital projects debt TID is set to retire this year.
“We're not going to be going further into debt with those changes,” Hashimoto said.
The district faces revenue challenges, with flat local consumption and an unpredictable wholesale market. At the same time, operations and maintenance costs are increasing in many areas – a $1.3 million increase in pension costs, $1.1 million to fund a three percent salary increase, and a $200,000 increase in medical costs.
Despite a lack of base rate increases, customers will pay more for their electricity starting Jan. 1. The last of three previously-approved “environmental charge” increases will take effect that date, increasing customers' bills by a further 4 percent. In all, the environmental charge, linked directly to TID's costs to comply with state environmental legislation, will have raised customers' rates 12 percent over three years.
Only two departments have yet presented their detailed budgets: the General Manager and Financial Services Administrations.
The General Manager's budget is set to rise three percent, from $4.2 to $4.4 million. That comes due to a three-percent pay raise for all TID employees, and increasing benefit costs. The General Manager's budget also includes $2.5 million in capital projects for the relicensing of Don Pedro Reservoir, and a further $50,000 in a contingency fund.
The Financial Services Administration budget will increase 4.4 percent, from $16 million to $16.7 million. The increase comes due to the aforementioned pay raise and benefit increases, plus a $100,000 increase in bad debt and $208,000 in additional Westside competitive transition charges. That bad debt comes as a consequence of the economic downturn, while the transition charges are a relic of the TID's purchase of the Westside service area from Pacific Gas and Electric.
The Financial Services Administration budget also calls for $3.6 million in capital projects, $2 million of that dedicated to the district's smart meter project. The funding will complete the initial smart meter implementation, reaching about 75 percent of the district's customers, and purchase a system to manage data gathered from the smart meters. A followup project to convert the remaining 25 percent of district households is expected in the coming years.