Annual report 2015

2015 Annual Report

TID crews completed the Lateral 8 Regulating Reservoir - the first reservoir built by the District since the completion of Don Pedro in 1971.

Overview 2015 Established in 1887, TID was the first publicly owned irrigation district in the state and one of only four in California today that also provides electric retail energy directly to homes, farms and businesses. Organized under the Wright Act, TID operates under the provisions of the California Water Code as a special district.

TID is also a balancing authority and is governed by a five-member Board of Directors.

Irrigated Acres

Electric Service Territory

2015 Peak Demand

147,943

662 square miles 517.5MW

Miles of Distribution Line

Miles of Transmission Line

Number of Electric Accounts (year end)

2,235

389

101,370

Customers per Mile of Distribution Line

Customers per Mile of Transmission Line

Employees

451

259

451

Bond Ratings

Board of Directors

Standard & Poor’s A+ Fitch A+ Moody’s A2

Michael Frantz Division 1 Charles Fernandes (VP) Division 2 Joe Alamo (President) Division 3 Rob Santos Division 4 Ron Macedo Division 5

Service Area

DON PEDRO LAKE XY

Y X

MODESTO

Y X

Y X

TUOLUMNE RIVER Y X Y X

X

X

Y X

CERES

Y X Y X

Y X

TURLOCK LAKE

Y X

X

Y X

Y X

HUGHSON

Y X

Y X XY

KEYES

X Y X Y X

DENAIR TURLOCK

Y NT OU NTY SC U U O LA DC NIS RCE STA ME

N SA

DELHI BALLICO XY

RIV

5

N UI AQ JO

PATTERSON

ER

HILMAR XY X

Y X

Y X

Y X

Y X

X

Y X

Y X

Y X

Y X

Y X

SANTA CLARA COUNTY

Y X

XY

STANISLAUS COUNTY

R RIVE CED MER XY

XY

H IG

HW AY 99

ELECTRICAL SERVICE AREA IRRIGATION SERVICE AREA

A Letter from the General Manager Throughout 2015, TID was faced with many challenges and uncertainties regarding our energy and water future. However, as the year developed, the District showed its ability to adapt, taking those challenges and shaping them into opportunities.

As the historic drought continued, TID was one of the few irrigation districts in the state that was able to provide water to its customers. While the amount of available water was not substantial, it was enough for customers to continue their livelihoods in the hopes of better winters ahead. Recognizing that a dry 2016 was a possibility, TID took the opportunity to construct a project that would seize additional water savings within our canal system.

Building on the success of a smaller pilot project at the confluence of Laterals 7 and 8 and the Highline Canal in Hilmar, TID began construction of the Lateral 8 Regulating Reservoir Expansion Project.

Working in conjunction with the Lateral 8 Total Channel Control Project, this 25-acre regulating reservoir has the capacity to save 9,000 acre-feet of water in an average water year, and the ability to start entire irrigation heads from the reservoir which increases the level of service for those customers served by Laterals 7 and 8. These projects both show how TID is embracing new technologies to most-effectively manage water resources.

Still, we would be foolish to embrace the new without leveraging existing assets. The Don Pedro Hydroelectric Project is set apart from other hydroelectric projects because it operates on a water-first-priority basis. Don Pedro is the lifeblood of our water system, and operating it efficiently is in the community’s best interest. As the end of our 50-year license loomed in 2016, we continued our efforts to relicense the project with the Federal Energy Regulatory Commission. Because of our stewardship, we are hopeful to acquire a new license in the near future.

Along with the drought, 2015 brought new legislative challenges, including California’s SB 350, which requires a utility’s Renewable Portfolio Standard be 50 percent renewable by 2030. Although TID has a clean resource mix, our largest source of clean energy, the Don Pedro Hydroelectric Project isn’t able to count towards our Renewable Portfolio Standard. As such, TID didn’t wait for legislation to move; we invested in a 20-year purchase power agreement (PPA) to buy clean, renewable solar power from SunPower. To serve the agreement, SunPower is constructing a 54-megawatt solar photovoltaic power plant at the company’s Rosamond Solar site in Kern County, which is expected to be operational by the end of 2016. The plant is anticipated to generate an equivalent amount of energy to serve approximately 20,000 homes. This PPA will move the District approximately 7 percent closer to meeting California’s 50 percent renewable standard by 2030.

No matter the challenge, TID has responsibly managed the resources entrusted to us, and we take every opportunity we can to continue to provide reliable water and power to our customers.

Casey Hashimoto, PE

Historical Operating Statistics (unaudited) 2015

2014

2013

2012

2011

Residential

72,772

72,909

72,366

72,033

71,829

Commercial

7,086

7,090

7,065

6,983

6,968

($ IN THOUSANDS)

AVERAGE CUSTOMERS AT END OF PERIOD:

Industrial

836

830

794

798

780

Other (1)

20,676

20,160

20,046

20,099

20,355

Total

101,370

100,989

100,271

99,913

99,932

Residential

706,945

725,523

716,316

713,915

693,659

Commercial

131,135

130,606

128,154

126,608

124,820

Industrial

766,170

749,864

747,745

738,693

729,239

Other (1)

411,734

399,761

393,316

377,315

346,822

2,015,983

2,005,754

1,985,531

1,956,531

1,894,540

62,565

69,199

68,235

66,846

49,137

1,439,114

1,388,342

1,641,616

1,542,545

1,942,107

3,517,662

3,463,295

3,695,382

3,565,922

3,885,784

Generated by district

2,267,333

2,257,182

2,214,620

2,305,959

2,369,260

Purchased

1,319,345

1,281,089

1,563,500

1,350,643

1,618,465

Subtotal

3,586,678

3,538,271

3,778,120

3,656,602

3,987,725

69,016

74,976

82,738

90,680

101,941

3,517,662

3,463,295

3,695,382

3,565,922

3,885,784

$113,282

$114,169

$109,790

$106,946

$100,655

Commercial

18,540

18,319

17,756

16,759

15,998

Industrial

91,521

87,318

85,711

80,006

75,891

Other (1)

55,190

52,226

50,453

45,117

41,571

(16,424)

3,093

(12,112)

425

(36,586)

MWh SALES:

Total Retail Interdepartmental meters Wholesale Power Total

SOURCES OF MWh:

System losses Total

ELECTRIC ENERGY REVENUES: (IN THOUSANDS) Residential

Power Supply Adjustment Recognized (Deferral)

262,109

275,125

251,598

249,253

197,529

Electric Service Charges

Total Retail Energy

470

497

488

358

408

Other Electric Revenue

78

77

76

81

74

Electric Energy Retail

262,657

275,699

252,162

249,692

198,011

Wholesale Power Total

SYSTEM PEAK DEMAND (MW)

50,973

64,341

73,460

49,115

69,334

$313,630

$340,040

$325,622

$298,807

$267,345

517

510

527

516

491

AVERAGE MWh SALES PER CUSTOMER FOR THE PERIOD Residential

9.715

9.951

9.899

9.911

9.657

Commercial

18.506

18.421

18.139

18.131

17.913

916.471

903.451

941.744

925.680

934.922

Residential

$160.24

$157.36

$153.27

$149.80

$145.11

Commercial

$141.38

$140.26

$138.55

$132.37

$128.17

Industrial

$119.45

$116.45

$114.63

$108.31

$104.07

$0.07195

$0.080

$0.070

Industrial

AVERAGE REVENUE PER MWh FOR THE PERIOD

AVERAGE COST OF POWER PER KWh FOR RETAIL LOAD(2)

(1) Includes agricultural and municipal water pumping, street lighting, and interdepartmental meters.

(2) Includes depletion and depreciation on generation assets, excludes debt service.

(3) Revised to reflect natural gas sales and depletion (4) Revised to reflect PG&E pipeline depreciation.

(5) Added A2PP and A2PP pipeline depreciation

(3)

$0.073

(3)&(5)

$0.063

(3)

Historical Results of Operations (unaudited) ($ IN THOUSANDS)

2015

2014

2013

2012

2011

OPERATING REVENUES: Electric energy - Retail Electric energy - Wholesale Wholesale Gas Irrigation Other Total Operating Revenue

$262,657

$275,699

$252,162

$249,692

$198,011

50,973

64,341

73,460

49,115

69,334

2,898

17,061

12,391

5,121

13,941

14,311

7,758

8,438

7,606

7,445

1,640

4,293

3,944

3,700

3,538

332,479

369,152

350,395

315,234

292,269

73,466

OPERATING EXPENSES: Power Supply: Purchased Power

55,202

63,926

68,505

64,158

Generation and Fuel

97,656

121,951

107,391

94,948

92,539

Total Power Supply

152,858

185,877

175,896

159,106

166,005

Other Electric O&M

23,330

22,730

23,506

19,561

19,732

Irrigation O&M

11,294

11,828

12,623

11,943

11,161

Public Benefits

6,119

6,962

6,908

5,012

4,614

21,135

21,640

20,528

20,703

19,962

Administration and General Loss of disposal of utility plant

-

-

2,438

5,634

-

Depreciation and amortization

62,515

70,442

64,496

53,152

50,109

277,251

319,479

306,395

275,111

271,583

55,228

49,673

44,000

40,123

20,686

Total Operating Expenses

OPERATING INCOME OTHER INCOME (EXPENSE): Interest/Derivative (loss)gain Miscellaneous Total Other Income

3,668

1,271

562

2,548

5,218

13,851

9,357

9,119

8,267

8,187

17,519

10,628

9,681

10,815

13,405

53,000

57,338

59,996

54,687

50,547

-

-

-

-

-

19,747

2,963

(6,315)

(3,749)

(16,456)

304,009

310,324

314,073

330,529

$296,095

$306,972

$304,009

$310,324

$314,073

2.81x

2.35x

2.83x

2.42x

2.82x

INTEREST EXPENSE Long Term Debt

TRANSFER (TO) FROM DEFERRED REGULATORY CREDITS NET INCOME (LOSS) RETAINED EARNINGS: BEGINNING OF YEAR END OF YEAR

276,348

(3)

DEBT SERVICE COVERAGE REVENUE BONDS/COP'S

(1) Walnut Energy Center went commercial 2/28/06.

(2) Electric Rate Stabilization transfer of $8,000 ‘(3) Government Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Report for Pensions, was a adopted in 2015 and as a result beginning of year Net Position was restated as of January 1, 2015

Management Team Casey Hashimoto

General Manager

Assistant General Managers Joseph Malaski Larry Gilbertson Tou Her Brian LaFollette

Financial Services & CFO Electrical Engineering & Operations Water Resources Power Supply

Advisors

Griffith & Masuda Orrick, Herrington & Sutcliffe LLP PricewaterhouseCoopers LLP Public Financial Management, Inc. SAIC Energy, Environment & Infrastructure, LLC

General Counsel Bond Counsel Independent Accountants Financial Advisor Consulting Engineers