1. FY 2017-18 and FY 2018-19 Biennial Budget Assumptions
Charles Turner
March 15, 2017

2. Agenda Key Budget Assumptions Schedule Rate and Fee Adjustments Water
Budget and Rate Setting is Centered Around the District’s Strategic Plan:
With a clearly defined mission and vision, as well as guiding principles that define how we interact with customers and employees, EMWD is driven by standards to provide safe, reliable, economical and environmentally friendly services:
Highly reliable water, recycled water and wastewater service
Protection of public and environmental health
Superior customer and community service
Sound planning and appropriate investment
Efficiency and fiscal responsibility
Exemplary employer
Effective communication and accountability
Key Budget Assumptions
Water
Sales
Purchases
Water Shortage Contingency Plan
Energy
Electricity
Natural Gas
Fuel
Chemicals
Wages and Benefits
Capital Needs
Schedule
Rate and Fee Adjustments

3. Conditions Assessment
Statewide emergency drought regulations remain in place until October 2017 (Possible reconsideration in May 2017)
Imported supplies above normal - Statewide snowpack is at 180% of normal and CRA watershed snowpack at 147% of normal
EMWD reverted to a Stage 2 voluntary reduction in February reinstated Tier 3 ( % of budget)
EMWD customer conservation remaining steady at 18% relative to 2013
Staff recommends conservative assumptions related to sales growth and cost projections

4. Water Sales and Supply
For FY 2017, project 6% increase in water sales (AF) compared to FY 2016 Actual.
Key driver is higher wholesale demand by LHMWD, WMWD, and Perris.
Assume 1% increase in water sales (AF) per year in FY 2018 and FY 2019
Slightly higher demands result in increased water purchases.
Higher IRRP replenishment deliveries are also forecasted through 2019.

5. Water Supply Costs
Metropolitan Water District (MWD) rates overall are projected to increase effective 1/1/2018 and 1/1/19 by 4.0% and 4.5% respectively.
Full Service Untreated Tier 1 rate increase by 4.4% in 2018
Changes to Treatment Fixed Rates are not expected to be implemented in this budget window
MWD Rates ( )

6. Water Supply Costs (cont’d)
EMWD’s purchased water costs are projected to increase by $6.2 million and $3.5 million in FY and FY respectively.
Estimated Purchased Water Cost

7. Water Revenue - WSCP
District’s water shortage contingency plan (WSCP) stages impact assumed revenue forecast.
Based upon current hydrology and supply conditions, staff anticipates remaining in non-mandatory WSCP stages (Stage 2 or lower) for FY
Stage
Date Approved
Description
Actions
Stage 1
April 2011
Supply Watch
Voluntary reduction up to 10%
Stage 2
April 2014
February 2017
Supply Alert
Voluntary reduction up to 25%
Voluntary reduction up to 20%
Stage 3
August 2014 (3a)
June 2016 (3c)
Mandatory Waste Reduction
3a: No variance adjustments; observation based penalties
3b: Tier 3 budgets decreased by 50%
3c: Tier 3 budgets decreased by 100%; All water waste prohibitions remain in place
Stage 4
May 2015 (4a)
Sept (4b)
January 2015 (4c)
April 2016 (4b)
Mandatory Outdoor Reduction
Watering schedules limited (1-2 days/week)
4a: Tier 2 budgets decreased by 10%
4b: Tier 2 budgets decreased by up to 50%
4c: Tier 2 budgets decreased by up to 100%
Stage 5
Mandatory Indoor Reductions
Catastrophic stage (50% reduction in demand)
5a: Tier 1 budgets decreased by 10%
5b: Tier 1 budgets decreased by up to 30%
5c: Tier 1 budgets decreased by up to 50%

8. Energy Electric energy cost to decrease as result of:
Lower demands (water),
Lower rates by SCE, and
Benefits associated with the installation of 5 MW of solar.
Gas energy cost to increase in FY as result of higher rates.
TVRWRF Solar Array Lot E – Looking Easterly toward Diaz Road, Temecula

9. Chemicals and Gasoline
Chemical costs anticipated to increase by $0.6 million and $1.5 million in FY and FY , respectively due to higher chlorine and sodium hypochlorite costs at wastewater plants.
Gasoline and diesel fuel costs are projected to remain unchanged through FY

10. Wages and Benefits Assumptions
Base Wages:
Proposing to add positions
Two FTEs in FY (to 632)
Four FTEs in FY (to 636)
COLA estimated at 2.3% each year, but will be indexed based on actual change in CPI
Merit Increase 2.1% each year
Pay for Performance 2.5% Pool
Compensation Study adjustments in late FY 17-18
Pension Contributions
Lump-Sum Prepayment of Actuarially Determined Contribution each year
Increases to employer PERS contributions based on PERS reduction in discount rate and portfolio de-risking
Continued negotiated transition of employee contributions to PERS through 2019
OPEB
Full Annual Actuarially Determined Contributions
Medical
Implications of ACA repeal and replacement are unknown
Assumes a 6% overall increase each year

11. Capital Program Capital Improvement Plan (CIP)
Anticipate $100 million to $110 million in annual CIP funding needs for FY and FY
Funding from 2017 new money bonds and reserves
Operating Fixed Assets (OFA)
Anticipate $9 million in OFA projects from FY to carry forward to FY
Long lead-times for equipment orders will be delivered in FY
Various IT initiatives will continue into FY
New OFA projects are anticipated to exceed prior year budget ($30 million)
Additional funding to support completion of AMI Meter program
Funding for OFA projects is from existing reserves and PAYGO (rates)

12. Budget Schedule for FY 2017-18 and FY 2018-19
Dates
Proposed Actions
March 15, 2017
Workshop: Review Key Budget Assumptions
April 5, 2017
Workshop: Review Initial Draft of Operating and Capital Biennial Budget
April 19, 2017
Workshop: Review Biennial Budget Final Draft, Consider Adoption (if appropriate)
June 21, 2017
If not adopted previously, last day to adopt FY and FY Biennial Budget before new fiscal year
September 6, 2017
Approve Prop 218 Notice and Review Proposed Rates based on New Cost of Service Methodology
September 30, 2017
Last Day to Mail Proposition 218 Notices
November 15, 2017
Public Hearing; Adopt Rates
January 1, 2018
Rates Become Effective

13. Contact Information
Charles Turner
Director of Finance
(951) Ext. 4363