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PUC mid‑year report: water revenues down, expense containment and debt actions offset shortfall
Summary
CFO Eric Sandler told commissioners water and wastewater revenues are below budget due to conservation; expense reductions and a debt-refunding relief (~$38M) offset shortfalls and the power enterprise reported improved revenue from additional wholesale sales.
At the commission meeting, Eric Sandler, Assistant General Manager for Business Services and CFO, presented the PUC's second-quarter financial report. Sandler said the water enterprise projects sales of 174 million gallons per day — about 20 MGD below the adopted budget — and estimated a revenue shortfall of about $50.5 million, largely driven by conservation. He said staff offset virtually all of that shortfall through expense containment measures and one-time benefits tied to a debt refunding that provided roughly $38 million in relief.
On wastewater, Sandler said budgeted revenues were down by about $13.7 million but were similarly offset by expense containment and projected salary savings. The power enterprise, by contrast, showed roughly $4.6 million in additional revenue, largely due to extra sales to Modesto and Turlock Irrigation Districts and reduced transmission and distribution expenses.
A commissioner questioned debt-service coverage metrics; staff explained the commission follows an indenture-based coverage calculation (which can include fund balances) and that rating discussions sometimes focus on current-coverage measures that exclude fund balances. The report concluded that the utility still met policy targets for reserves and coverage across the three enterprises.
The CFO said staff would answer follow-up questions about the detailed budget assumptions and present supporting materials at upcoming budget hearings.
