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Auditor issues clean opinion on Waukesha utility 2024 financials; debt coverage strong
Summary
Baker Chile partner Jody Dobson presented the 2024 audit to the commission on June 19, reporting an unmodified (clean) opinion and noting a debt-coverage ratio of 7.1 (requirement 1.1), stable cash balances and a modest decline in months of cash on hand tied to project timing.
Jody Dobson, the auditor who led the city utility’s 2024 financial audit, told the Waukesha Water Utility Commission on June 19 that the audit opinion is unmodified — commonly described as a clean opinion — and that the utility’s financial results were a fair presentation of its position and operations for the year.
Dobson summarized key benchmarks the commission watches: a 2024 rate-of-return of about 4.1 (up from interim levels in 2023), an operating margin recovery after transition-year costs, and a debt-coverage ratio of about 7.1 (well above the 1.1 requirement used for revenue-debt covenants). Dobson noted a recent accounting-standard change related to compensated absences that had only a slight effect on reporting.
"The opinion this year is, as in the past, an unmodified or a clean opinion," Dobson told commissioners. She advised the commission to watch unrestricted reserves (months of cash on hand) and noted rating agencies look for larger cushions — 6–12 months — for higher bond ratings. The utility’s months-of-cash metric declined from prior levels but the cash balance remained stable, a change Dobson attributed in part to timing and one-time items during the Great Water Alliance transition.
Commissioners asked about operating expense trends and whether bond-rating agencies would be concerned by the level of debt used to finance recent capital work. Dobson said the high percentage of assets financed with outstanding debt (about 81% at year-end) is consistent with a utility that has just completed a large capital project and should decline as repayment proceeds.
The commission received the audit and had no substantive objections; staff will present a final package for formal acceptance when all documentation is finalized.
Context: The auditor’s clean opinion helps staff and commissioners demonstrate to regulators and potential bond-rating agencies that the utility’s financial statements present a fair view of operations despite a large capital program in recent years.
