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05.F.3) Rate Impact Scenarios
F 3. RATE IMPACT SCENARIOS By Danea Gemmell, Division Manager - Planning and Development Sudhir Pardiwala - Raftelis Financial Consultants (RFC) CIB SCENARIOS 1 0 -YR CIP FY17-18 to FY 26-27 Scenario O&M Budget 10 -Yr CIP Payment Methods CIB next 2 FYs (FY 17-18 and FY 18- 19) SCF Starting Balance FY 17-18 Bonds Description of Scenario Cost of Service Study (COS) Updated Base Line (COS) Scenario 1 Scenario 2 FY 14-15 O&M Updated O&M Budget Updated O&M Budget Updated O&M Budget Scenario 3 Updated O&M Budget Scenario 4 Updated O&M Budget Current 10 -yr CIP ($413M) Current 10 -yr CIP ($413M) New 10 -yr CIP ($867M) New 10 -yr CIP ($867M) New 10 -yr CIP ($867M) New 10 -yr CIP ($867M) Pay -as -you - Go Method Pay -as -you - Go Method Pay -as -you - Go Method Pay -as -you - Go Method w/ Partial Bond Funding Pay -as -you - Go Method w/ Partial Bond Funding Pay -as -you - Go Method w/ Partial Bond Funding Same as approved Budget ($43.3M/$39.5M) Same as approved Budget ($40M/$41M) Same as approved Budget ($40M/$41M) Same as approved Budget ($40M/$41M) Added $16.5M to approved Budget based on CWMP recommendations Same as approved Budget ($40M/$41M) $10.9M None $23.7M None $23.7M None $23.7M $23.7M $27M $477M in Bonds in 3 issuance: 1. FY18-19: $105M 2. FY21-22: $178M 3. FY24-25: $194M $477M in Bonds in 3 issuance: 1. FY18-19: $105M 2. FY21-22: $178M 3. FY24-25: $194M $477M in Bonds in 3 issuance: 1. FY18-19: $105M 2. FY21-22: $178M 3. FV24-25: $194M Cost of Service Study Raftelis Financial Consultants May 2015 Updated COS using most recent O&M data Add CWMP additional $454M CIP; or a total of $867M for new 10 -yr. Same as Scenario 1 but issue three bonds and pay -go methods to pay for new 10 -yr CIP Same as scenario 2, but add projects in next two fiscal years as recommended by CWMP. This adds $16.5M over next two FYs. Same as scenario 3, but delay rate increase (i.e. no rate increase in FY17-18). Start rate increases in FY18-19. Use $3.359M from favorable variance SUMMARY OF SCENARIOS UPDATED BASELINE Cost of Service Updated Baseline Prior Year 2015-16 Scenario used for Rate Setting (June 2015) .D.rcentaae Increase $10.9M $28 528 528 $21 521 522 523 $24 $24 $25 $747 48.5% 5.57% 5.35% 4.97% 3.54 3.5% 3.5% 3.5% 3.5% 3.5% 3,5% Updated Data Including Retirement (CCCERA) & Medical Rates, $413M CIP $23.7M $28 529 528 $21 521 522 523 524 $24 $25 $748 48.7% Percentage increase 5.6% 5.4% 5.0% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% Annual Rate Increases 1 2 3 4 5 6 7 8 9 10 10 -Year Scenario SCF Starting Ending ID Description _ Balance 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 Total Cost of Service Updated Baseline Prior Year 2015-16 Scenario used for Rate Setting (June 2015) .D.rcentaae Increase $10.9M $28 528 528 $21 521 522 523 $24 $24 $25 $747 48.5% 5.57% 5.35% 4.97% 3.54 3.5% 3.5% 3.5% 3.5% 3.5% 3,5% Updated Data Including Retirement (CCCERA) & Medical Rates, $413M CIP $23.7M $28 529 528 $21 521 522 523 524 $24 $25 $748 48.7% Percentage increase 5.6% 5.4% 5.0% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% Rev Adj 53 '+ r 3 2 3 1% UPDATED BASELINE 5.6% Revenue Adjustments & Coverage Ratios 5.4% 5.0% 3.5% 3.5% 3.5% 3.5% FY2017 FY2019 FY2021 FY2023 Mil RevAbjustrnents -Total S70 C 2 560 $50 $40 $30 520 510 So ei 14y HSI,I I e lee Debt Coverage 33 30 27 2 5.5 ► 3.5% 21 18 15 12 9 6 3 0 FY 2025 Debt Coverage - Debt Coverage - Parte Coverage Ratio at 2.0 Capital Financial Plan N 11 • FY2017 FY 2019 FY2021 FY2023 FY2025 Property Tax Bonds Proceeds mini SRF Loans Other MNSSC MM. Reserves -Total C P uiIn SlYee�au�i__ iii i�.ni iii Uiil..bii SiiIS.w i.A anlpNW iii...iAW Y➢�Mw.,a 1lJ�Wl,i a J. ��A. �.! . u-...... Mase=iasazareai ,414 SUMMARY OF SCENARIOS SCENARIO 1 Cost of Service Updated Baseline Prior Year 2015-16 Scenario used for Rate Setting (June 2015) Percentage Increase $10.9M $28 $28 528 $21 $21 522 523 $24 $24 $25 $747 48.5% 5.57% 535% 4.97% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% Updated Data Including Retirement (CCERA) & Medical Rates, $413M CIP $23.7M $28 $29 $28 $21 $21 $22 523 $24 524 $25 $748 - 48.7% Percentage Increase 5,4% 5.0% 3.5% 3.5% 3.5% 3.5%, 3.5% 3.5% 3.5% Updated Data Including Retirement (CCERA) 84.• i. Medical Rates. $867M CWMP, Pay As You Go Funding $23.7M $31 5174 $132 $47 $43 $33 $34 $35 $36 $37 $1,103 119.4% Percentage Increase 6.2% 32.5% 18.6% 4.8% ,.„., . 3.5% 3.5% 3.5% 3.5% 3.5% III IINIM Annual Rate Increases 1 2 3 4 5 6 7 8 9 10 10 -Year Scenario SCF Starting Ending ID Description Balance 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 Total Cost of Service Updated Baseline Prior Year 2015-16 Scenario used for Rate Setting (June 2015) Percentage Increase $10.9M $28 $28 528 $21 $21 522 523 $24 $24 $25 $747 48.5% 5.57% 535% 4.97% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% Updated Data Including Retirement (CCERA) & Medical Rates, $413M CIP $23.7M $28 $29 $28 $21 $21 $22 523 $24 524 $25 $748 - 48.7% Percentage Increase 5,4% 5.0% 3.5% 3.5% 3.5% 3.5%, 3.5% 3.5% 3.5% Updated Data Including Retirement (CCERA) 84.• i. Medical Rates. $867M CWMP, Pay As You Go Funding $23.7M $31 5174 $132 $47 $43 $33 $34 $35 $36 $37 $1,103 119.4% Percentage Increase 6.2% 32.5% 18.6% 4.8% ,.„., . 3.5% 3.5% 3.5% 3.5% 3.5% III IINIM Rev Ady 35% 30% 25° 20% 15% 10% 5% 0138 yt $150 $140 $120 $100 $80 $50 $40 $20 50 SCENARIO 1 Revenue Adjustments & Coverage Ratios 32.5° FY 2017 FY 2019 18.6% 5.6% 4.8% P( 2021. 3.5% FY 2023 3.5% 3.5% 3.5% 1111 FY 2025 Debt Coverage 60 57 54 48 45 42 39 36 33 30 27 24 21 18 15 9 3 Rev Adjustments - Total Debt Coverage Debt Coverage - Party Coverage Ratio at 2.0 Capital Financial Plan FY2017 FY2019 FY2021 Ma property Tac NEM Bonds Proceeds SRF Loans OtherSSC FY 2023 FY 2025 Reserves -Total CP SUMMARY OF SCENARIOS SCENARIO 2 _ - - - - - Annual Rate Increases kw* ilb 1 2 3 4 5 6 7 8 9 10 10 -Year Scenario SCE Starting Ending ID Description • Balance 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 Total Cost of Service Updated Baseline Prior Year 2015-16 Scenario used for Rate Setting (June 2015) Percentage increase $10.9M $28 $28 $28 $21 $21 $22 S23 $24 $24 $25 $747 48.5% _ 5.57% 5.35% 4.97% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% Updated Data Including Retirement (CCCERA) & Medical Rates, $413M CIP $23.7M $28 $29 $28 $21 $21 $22 $23 $24 $24 $25 $748 48.7% Percentage Increase 5.6% 5.4% 5.0% 3,5% 3.5% 3.5% 3,5% 3.5% 3.5% 3.5% Updated Data Including Retirement (CCCERA) : 1 & Medical Rates. $867M CWMP, Pay As You Go Funding $23.7M $31 $174 $132 $47 $43 $33 $34 $35 $36 $37 $1,103 119.4% Percentage Increase 6.2% 32.5% 18.6% 5.6% 4.8% 3,5% 3.5% 3.5% 3.5% 3.5% . , Updated Data Including, Retirement )CCCERA)- 2 & Medical Rates. $867M CWMP, Partial Debt Funding $23.7M $33 $32 $34 $36 $38 $41 $43 546 $48 551 5905 Percentage Increase 6.5% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 5.0% 6.0% 79.9% Debt Issue (.,477 nyllions) 195Y .178/1 $194A4 Rev Adj 7% 6% 6% 6% 6% 6% 6% 6% 6% $100 $80 $60 $40 520 50 SCENARIO 2 1111 1111 Revenue Adjustments & Coverage Ratios 6.5% \6.0, 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 111 FY 2017 FY 2019 FY 2021 FY 2023 Debt Coverage 15 :.2 9 6.0% 6 3 0 FY 2025 min Rev Adjustments - Total Debt Coverage - Debt Coverage - Parity -Coverage Ratio at 2.0 • NOW Capital Financial Plan 8 FY 2017 FY 2019 FY 2021 1.1,11., 1111 FY 2023 FY 2025 Property Tax slim Bonds Proceeds own SRF Loans Other INE.SSC am Reserves -Total CIP SUMMARY OF SCENARIOS SCENARIO 3 Cost of Service Updated Baseline - Prior Year 2015-16 Scenario used for Rate Setting (June 2015) Percentage Increase $10.9M $28 528 $28 521 521 522 523 $24 524 $25 $747 48.5% 5,57% 5.35% 4.97% 3.5% 3.5% 3.5% 3.5% 3:5% 3.5% 3.5% Updated Data Including Retirement (CCERA) &_ Medical Rates, $413M CIP $23.7M 528 529 528 521 521 $22 523 $24 524 525 $748 48.7% Percentage Increase ,. 5.6% 11, I 5.4% 5.0% 3.5% 3.5% . 3.5% 3.5% 3.5% 3.5% 3.5% Updated Data Including Retirement (CCERA) & 1 - Medical Rates. $867M CWMP, Pay As You Go Funding $23.7M 531 $174 5132 $47 $43 533 $34 $35 $36 $37 51,103 119.4% Percentage Increase Updated Data Including, Retirement (CCERA) 2 & Medical Rates. $867M CWMP, 6.2% 32.5% 18.6% 5.6% 4.8% 3.5% 3.5% 3.5% 3.5% 3.5% Partial Debt Funding $23.7M $33 $32 $34 $36 538 $41 $43 546 548 551 5905 Percentage Increase 6.5% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 79.9% Debt Issue ($477 millions) $105M . $178M $194M Scenario 2 with Additional $17M CIP in Years 3 1 & 2 per CWMP Recommendation $23.7M 538 $41 $35 537 539 542 544 547 $49 $52 $926 Percentage Increase 7.5% 7.5% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 84.2% Debt Issue ($477 millions! $105M $178M $194M y Annual Rate Increases 1 2 3 4 5 6 7 8 9 10 10 -Year Scenario SCF Starting Ending ID , Description Balance 2017-18 2018-19 2019.20 2020-21 2021-22 2022-23.2023-24 2024-25 2025-26 2026-27 Total Cost of Service Updated Baseline - Prior Year 2015-16 Scenario used for Rate Setting (June 2015) Percentage Increase $10.9M $28 528 $28 521 521 522 523 $24 524 $25 $747 48.5% 5,57% 5.35% 4.97% 3.5% 3.5% 3.5% 3.5% 3:5% 3.5% 3.5% Updated Data Including Retirement (CCERA) &_ Medical Rates, $413M CIP $23.7M 528 529 528 521 521 $22 523 $24 524 525 $748 48.7% Percentage Increase ,. 5.6% 11, I 5.4% 5.0% 3.5% 3.5% . 3.5% 3.5% 3.5% 3.5% 3.5% Updated Data Including Retirement (CCERA) & 1 - Medical Rates. $867M CWMP, Pay As You Go Funding $23.7M 531 $174 5132 $47 $43 533 $34 $35 $36 $37 51,103 119.4% Percentage Increase Updated Data Including, Retirement (CCERA) 2 & Medical Rates. $867M CWMP, 6.2% 32.5% 18.6% 5.6% 4.8% 3.5% 3.5% 3.5% 3.5% 3.5% Partial Debt Funding $23.7M $33 $32 $34 $36 538 $41 $43 546 548 551 5905 Percentage Increase 6.5% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 79.9% Debt Issue ($477 millions) $105M . $178M $194M Scenario 2 with Additional $17M CIP in Years 3 1 & 2 per CWMP Recommendation $23.7M 538 $41 $35 537 539 542 544 547 $49 $52 $926 Percentage Increase 7.5% 7.5% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 84.2% Debt Issue ($477 millions! $105M $178M $194M Rev Adj 5% 4% 2% 1% 0% 5160 $140 $120 $100 $ao $60 $40 $20 SO 1.1 7.5% SCENARIO 3 Revenue Adjustments & Coverage Ratios 7.5% FY2017 FY 2019 6.0% 6.O% 6.0% 6.O% 6.D% 6.O% 6.0% Pe 2021 111 FY 2023 FY 2025 Debt Coverage 15 am Rev Adjustments - Total Debt Coverage ---- Debt Coverage - Parity -Coverage Ratio at 2.0 FY2017 Capital Financial Plan ism Property Tax .11,,I.1.11 FY 2019 FY 2021 am Bonds P roceeds difin SRF Loans 12 9 6 3 0 II 111, 11111 FY 2023 FY 2025 Other • SSC Wii9 Reserves -Total CIP SUMMARY OF SCENARIOS SCENARIO 4 Cost of Service Updated Baseline Prior Year 2015-16 Scenario used for Rate Setting (June 2015) Percentage Increase $10.9M S28 528 528 521 521 522 523 524 524 525 5747 48.5% Updated Data Including Retirement (CCCERA) & Medical Rates, $413M CIP $23.7M Percentage Increase i)/% 5,35% 4.97% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% $28 506 529 $28 5.4% 5.0% 521 $21 $22 $23 524 $24 $25 $748 48.7% 3.5% 3.596 3.5% 3.5% 3.5% 3.5% 3.5% Updated Data Including Retirement (CCCERA) i. . & Medical Rates. $867M CWMP, Pay As You Go Funding $23.7M _ 531 $174 $132 547 $43 $33 534 535 536 537 $1,103 119.4% Percentage Increase 6.2% 32.5% 18.6% 5.6% 4.8% 3.5% 3.5% 3.5% 3.5% 3.5% Jpdated Data Including, Retirement (CCCERA) 2 & Medical Rates. $867M CWMP, Partial Debt Funding $23.7M $33 532 534 536 538 $41 543 $46 548 551 Percentage Increase 6.5% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% Debt Issue ($477 millions) $105M $178M $194M Scenario 2 with Additional $17M CIP in Years 3 1& 2 per CWMP Recommendation Percentage Increase Debt Issue ($477 millions) Updated Data Including Retirement (CCCERA) 4 & Medical Rates. $867M CWMP, Partial Debt Funding Percentage Increase Debt Issue ($477 millions) 5905 79.9% $23.7M $38 $41 $35 537 539 542 544 547 $49 $52 $926 7.5% 7.5% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 84.2% $105M $178M $194M $27.0M $o $51 557 562 540 0.0% 10.2% 10.2% 10.2% 6.0% .$105M$178M ,,- - 543 $45 $48 6.0% 6.0% 6.0% $194M 551 554 5955 6.0% 6.0% 89.8% Annual Rate Increases 1 2 3 4 5 6 7 8 9 10 10 -Year Scenario SCF Starting Ending ID _ Description Balance 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 Total Cost of Service Updated Baseline Prior Year 2015-16 Scenario used for Rate Setting (June 2015) Percentage Increase $10.9M S28 528 528 521 521 522 523 524 524 525 5747 48.5% Updated Data Including Retirement (CCCERA) & Medical Rates, $413M CIP $23.7M Percentage Increase i)/% 5,35% 4.97% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% $28 506 529 $28 5.4% 5.0% 521 $21 $22 $23 524 $24 $25 $748 48.7% 3.5% 3.596 3.5% 3.5% 3.5% 3.5% 3.5% Updated Data Including Retirement (CCCERA) i. . & Medical Rates. $867M CWMP, Pay As You Go Funding $23.7M _ 531 $174 $132 547 $43 $33 534 535 536 537 $1,103 119.4% Percentage Increase 6.2% 32.5% 18.6% 5.6% 4.8% 3.5% 3.5% 3.5% 3.5% 3.5% Jpdated Data Including, Retirement (CCCERA) 2 & Medical Rates. $867M CWMP, Partial Debt Funding $23.7M $33 532 534 536 538 $41 543 $46 548 551 Percentage Increase 6.5% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% Debt Issue ($477 millions) $105M $178M $194M Scenario 2 with Additional $17M CIP in Years 3 1& 2 per CWMP Recommendation Percentage Increase Debt Issue ($477 millions) Updated Data Including Retirement (CCCERA) 4 & Medical Rates. $867M CWMP, Partial Debt Funding Percentage Increase Debt Issue ($477 millions) 5905 79.9% $23.7M $38 $41 $35 537 539 542 544 547 $49 $52 $926 7.5% 7.5% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 84.2% $105M $178M $194M $27.0M $o $51 557 562 540 0.0% 10.2% 10.2% 10.2% 6.0% .$105M$178M ,,- - 543 $45 $48 6.0% 6.0% 6.0% $194M 551 554 5955 6.0% 6.0% 89.8% • Rev Adj 12% 10% 0.0% 0.0% FY 2017 SCENARIO 4 1 11 I I 1 I II 1 1 1 111 Revenue Adjustments & Coverage Ratios 10.2% FY 2019 Mr Rev Adjustments - Tot& 1111,111 II 11 $160 $140 2 $120 s1C0 $80 $60 40 $20 so NNW 10.2% 10.2% 6.0% 6.0% 6.O% 6.O% 6.0% FY 2021 FY 2023 FY 2025 Debt Coverage 12 Dept Coverage -Debt Coverage - Panty - Reci'd Coverage 2.0 11 1 11 1 II I I, Capital Financial Plan 11 FY 2017 FY 2019 FY 2021 Property Tax MEE Bonds Proceeds ME SRF Loans 1 1.11.11 411_1,, :11, 1 11 IL, FY 2023 FY 2025 Other MINESSC UReserves -Total CP 9 6 3 0 5160, ODD ,C00 $140.000 ,`,:0C. siza000 5100,000,0D0 SSC, 300, 000 550,000,000 $40,000,000 S20000. CIP FUNDING SOURCES CIP FundingSources and Collection Systern CIP Spending* FY 2017 FY 2018 * Shown in Inflated Dollars * Based on Scenario 2 FY 21)19 FY 2020 FY 2021 FY 2022 FY 2023 F7 - 4 FY 2025 min Cash funding mew Debtfundng CSC port on fCiP C FY 2026 FY 2027 STAFF RECOMMENDATIONS FOR ITEM F 3. • CWMP 10 -Yr CIP: Wiici Scenario? • Continue Pay -as -You -go for Pi 3e ine Rep acement Projects • Issue tree Bonds for Financing of Large (Less Frequent and non-recurring) Infrastructure Projects • Consider Updating Reserve Policy BP -017 on Caital Reserve • Meet Reserve Targets (Ful y funded 3y FY 17-18)