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Audit: Waukesha Water Utility posts clean opinion; cash reserves and debt coverage remain strong
Summary
Auditor Baker Tilly issued an unmodified (clean) opinion on the utility's 2024 financial statements. The commission heard metrics on rate of return, debt coverage and cash-on-hand during the commission's June 19 meeting.
Waukesha — Auditor Jody Dobson of Baker Tilly told the Waukesha Water Utility Commission on June 19 that the 2024 audit resulted in an unmodified, or clean, opinion and that key financial metrics indicate the utility remains in a stable position despite recent capital spending.
Dobson said the auditor reviewed changes from 2023 to 2024, applied testing procedures and concluded the financial statements fairly present the utility’s financial position and results of operations. She told commissioners there was one new accounting standard in effect related to compensated absences that produced a slight, non-material change in presentation.
Key findings and metrics cited at the meeting: - Audit opinion: unmodified (clean). Dobson said the opinion "is, as in the past, an unmodified or a clean opinion." - Rate of return: The utility's rate of return ended 2024 at about 4.1%. Staff noted the PSC benchmark at the time was about 6.2 and that 2025 results may move closer to that benchmark as the second-step rates were in effect only part of 2024. - Debt coverage: Earnings available for debt service exceeded the requirement (the utility’s debt-coverage metric was reported as significantly above the 1.1x requirement for revenue debt). - Months of cash on hand: Cash balances are stable; auditors and staff noted a target minimum (GFOA minimum of three months) and that rating agencies look for higher months (6–12 months) when evaluating bond ratings. The utility ended the year with cash on hand that staff characterized as a strong position given recent capital spending. - Capital financing: The utility reported about 81% of capital assets financed with outstanding debt, a result the auditor said is consistent with a utility that has completed a major capital project and will trend downward over time.
Commissioner questions centered on whether operating expenses would continue to trend down. Dobson and staff said 2024’s lower operating expenses partly reflected timing and one-time items tied to the project transition; 2025 projections would depend on actual operations and budgeted expectations.
Next steps: The draft audit will be finalized for formal acceptance later in the process; staff said they will bring a final version for commission action once reports are complete.
