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EAST BAY MUNICIPAL UTILITY DISTRICT

Management’s Discussion and Analysis

June 30, 2014

9

Results of Operations

In the current fiscal year, the District’s total operating revenue of $462 million for the year increased by $35 million and total operating expense of $406 million for the year increased by $21 million. The District’s net position increased in the current and prior fiscal years. The change in net position (including capital contributions) decreased from $37 million in the previous fiscal year to $35 million in the current fiscal year. The District’s total net position increased from $1,629 million to $1,664 million during the current fiscal year.

The major components of the District’s results of operations in the current fiscal year were:

Water revenues increased by $31 million, mainly reflecting a 9.75% water rate increase in the current fiscal year.

Wastewater revenues increased by $4 million, mainly reflecting a 9% rate increase in the current fiscal year.

Power revenues decreased by $2 million over the previous year due to lower precipitation and run-off for power generation in the current fiscal year as compared to the previous fiscal year.

Operating expense increased by $21 million, primarily as a result of an increase in raw water expenses of $6 million from the purchase of additional drought water supply, and water treatment and distribution expenses increased by approximately $8 million as a result of $5 million increase in the maintenance of distribution mains and $4 million increase in sewer lines and pumps expenses and sewer treatment plant operation expenses.

Non-operating net expense increased by $8 million primarily due to the reclassification of the change of equity in JPA partnership fund from amortization expense to non-operating expense.

Capital contributions decreased by $7 million primarily reflecting a decrease of $7 million in grant received in current fiscal year compared to the prior year. Page 16 contains additional capital contributions information.


Management’s Discussion and Analysis

June 30, 2014

10

In the previous fiscal year, the District’s total operating revenue of $427 million for the year increased by $34 million and total operating expense of $385 million for the year increased by $13 million. The District’s change in net position (including capital contributions) increased from negative $27 million in fiscal year 2012 to $37 million fiscal year 2013. The District’s total net position increased from $1,592 million to $1,629 million during the fiscal year 2013.

The major components of the District’s results of operations in fiscal year 2013 were:

Water revenues increased by $30 million, mainly reflecting a 6% water rate increase and a 3.9% increase in consumption in fiscal year 2013.

Wastewater revenues increased by $4 million, mainly reflecting a 6% rate increase in the current fiscal year 2013.

Power revenues decreased by $1 million over the fiscal year 2012 due to lower precipitation and run-off for power generation in the fiscal year 2013 as compared to the previous fiscal year.

Operating expense increased by $13 million, primarily due to a $15 million increase in General Administration that includes an increase of $5 million in information services equipment, regulatory compliance, public information and emergency preparedness, no adjustment to amortization expense of $10 million as in fiscal year 2012, offset by $2 million reduction in expenses related to water and wastewater operations because of cost containment measures based on lower projected water consumption.

Non-operating net expense decreased by $34 million primarily due to a $4 million increase by a one-time state reimbursement of borrowed property taxes (Prop 1A) and one-time redevelopment agency property tax reimbursements, no $25 million charge for swap counterparty change as in fiscal year 2012, and a $5 million reduction in amortization of bond expenses.

Capital contributions increased by $9 million primarily reflecting increased funds received from state grants ($4 million from Mokelumne Aqueducts Interconnection Project) and an increase in net funds from System Capacity Fees, mainly reflecting an 11% rate increase and a one-time major construction project in Walnut Creek. In addition, there were $1 million fewer refunds in the fiscal year 2013 versus the prior year with overall connections staying the same. Page 16 contains additional capital contributions information.

EAST BAY MUNICIPAL UTILITY DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2014 AND 2013 (Dollars in Thousands)

41

NOTE 2 - CASH AND INVESTMENTS (Continued)

The Director of Finance is authorized to transfer assets from any asset class which exceeds the long-term asset allocation goal by more than 3% at the end of two or more consecutive quarters, allocating the excess assets to a manager or group of managers with the exception of real estate managers. The Director of Finance is further authorized to withdraw assets from assigned managers as necessary to efficiently meet operating needs. The equity and fixed income asset allocations may vary by up to ± 5% from the long-range asset allocation goals. The core fixed income target allocation (10% of the total portfolio) will primarily consist of U.S. denominated fixed income securities. Individual managers may invest up to 20% of their assets in international fixed income securities. The non-core fixed income target allocation (10% of the total portfolio) will primarily consist of U.S. denominated fixed income securities. Individual managers may invest up to 35% of their assets in international fixed income securities. It is expected that this allocation may have a material allocation to below investment grade securities. The domestic equity allocation target (40% of the total portfolio) will consist of approximately 37% in large cap market related growth and value (average risk) securities, 3% in small capitalized securities, and 20% in international securities. The international equity allocation target will consist of approximately 17% international equities and 3% emerging markets. It is expected this allocation will allow for exposure to mid cap securities based on tactical decisions by the Retirement Fund's large cap and small cap domestic equity managers. The covered calls target allocation (20% of the total portfolio) may consist of a combination of Chicago Board Options Exchange S&P 500 BuyWrite Index (the “BXM Index”) replication strategy and/or active non-replication strategies and their underlying domestic equity portfolios. The international equity target allocation (15% of the total portfolio) will consist of approximately 12% in international equities and 3% in emerging markets equities. The real estate target allocation (5% of the total portfolio) will consist of either equity (ownership) and/or fixed income participation in commercial, industrial, or residential properties. Investments may include interests in mortgages pools secured by loans of underlying properties. The allocation goal recognizes that at any time equity and fixed income managers may have transactional cash on hand and the District will maintain enough cash as working capital to effectively meet cash flow demands on the system. However, there is no specific allocation for cash as all investable cash is allocated to specific investment disciplines. Holdings of securities issued by the United States Government or any of its agencies need not be diversified. Securities of any one issuer with maturities of more than one year, other than the United States Government or any of its agencies, shall not exceed 5% of the value of the total portfolio. Securities of any one issuer of foreign government issues shall not exceed 10% of the value of the total portfolio at the time of purchase. Fixed income managers have the authority to make international investments, not to exceed 20% of their total portfolio.

EAST BAY MUNICIPAL UTILITY DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2014 AND 2013 (Dollars in Thousands)

42

NOTE 2 - CASH AND INVESTMENTS (Continued) The use of futures and options in the fixed income accounts may be used as part of their portfolio management strategy and will be incidental to their securities trading activities. The resulting aggregate risk profile (volatility) of the portfolio will not be different from that permissible by using securities only. Short (sold) options positions will generally be hedged, either with current portfolio security holdings, other options or futures options. Mortgage derivatives with significant short option characteristics will not exceed 5% of the portfolio, and will generally be a) offset by positions in other mortgage derivatives, or b) offset by other portfolio positions. No derivatives will be executed which will increase the value at risk of the portfolio by more than 25 basis points of the portfolio’s market value. Structured notes with significant short options positions or increasing leverage will not be purchased, and in no case will structured notes exceed 5% of portfolio value. Structured notes issued by the U.S. Government (treasuries and agencies) will be considered allowable investments, and are restricted to 25%. Fixed income managers are authorized to use futures and options contracts to supplement their investment capabilities to provide flexibility in managing the fixed income portfolios and reduce the cost of implementing strategies to respond to changing market conditions without incurring the higher transaction costs associated with buying and selling specific securities. These transactions are authorized to enable the manager to reduce the exposure of the portfolio to interest rate changes by reducing or increasing the duration of the portfolio without selling any of the actual holdings. No more than 5% of the portfolio will be invested in original futures margin and options premiums, exclusive of any in-the-money portion of the premiums. Each equity portfolio shall be diversified. When fully invested in equities or at its normal level of investment, a minimum of 20 securities should be held. At no time may a single equity investment exceed 5% of the value of the total retirement fund.

Each international equity portfolio shall be diversified. When fully invested in international equities or at its normal level of investment, a minimum of 20 securities should be held. At no time may a single international equity investment exceed 5% of the value of the total retirement fund.

E. Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the market value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its market value to changes in market interest rates. The District generally manages its interest rate risk by holding investments to maturity.

Information about the sensitivity of the market values of the District’s and System’s investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the District’s investments by maturity or earliest call date.

FINANCIAL TRENDS FOR THE PERIOD

FISCAL YEAR 2005 TO 2014

EAST BAY MUNICIPAL

UTILITY DISTRICT Oakland, CA

CONTENTS

DESCRIPTION PAGE INTRODUCTION Executive Summary ......................................................................................................... i

WATER SYSTEM INDICATORS 1) Revenue Debt Service Coverage Ratio ..................................................................... 1 2) Percentage of Debt Funded Capital Spending ........................................................... 1 3) Reserve Balances ..................................................................................................... 2 4) Total Assets............................................................................................................... 2 5) Total Revenue ........................................................................................................... 3 6) Other Revenues ........................................................................................................ 3 7) Outstanding Debt Balances ....................................................................................... 4 8) Number of Accounts .................................................................................................. 4 9) Percentage of Billed Revenue Collected .................................................................... 5 10) Comparative FY 2014 Water Rates for Selected Agencies ........................................ 5 11) Funded Pension and Health Benefit Obligation Percentage ...................................... 6 12) Comparative FY 2012 Funded Pension and HB Obligation for Selected Agencies .... 6

WASTEWATER SYSTEM INDICATORS

1) Revenue Debt Service Coverage Ratio ..................................................................... 7 2) Percentage of Debt Funded Capital Spending ........................................................... 7 3) Reserve Balances ..................................................................................................... 8 4) Total Assets............................................................................................................... 8 5) Total Revenue ........................................................................................................... 9 6) Other Revenues ........................................................................................................ 9 7) Outstanding Debt Balances ..................................................................................... 10 8) Number of Accounts ................................................................................................ 10 9) Percentage of Billed Revenue Collected .................................................................. 11 10) Comparative FY 2014 Sewage Rates for Selected Agencies .................................. 11

APPENDIX

Finance Policy 4.02 (Cash Reserves and Debt Management) ............................................................ 12


INTRODUCTION

Introduction

Executive Summary

The Financial Trends Report covers Fiscal Years 2005 through 2014 for the Water and Wastewater Systems.

Water System Overview

The overall financial condition of the Water System is sound, with a stable revenue base and rates that compare favorably with other local water agencies. The Water System met the target levels set by the District’s Cash Reserve and Debt Management Policy. Planning for the future is a major focus of the Water System. The District’s Water Treatment and Transmission Improvements Program, Water Supply Management Program, and Regulatory Compliance all focus on providing adequate, high quality water service to District customers, now and into the future.

Wastewater System Overview

Likewise, the financial condition of the Wastewater System is sound, with a stable revenue base and rates. The Wastewater System continues efforts to meet the target levels set by the District’s Cash Reserve and Debt Management Policy. Planned capital expenditures continue to focus on maintaining the infrastructure and ensuring compliance with existing regulatory and permit requirements.

i


WATER SYSTEM

Detail Section

WATER SYSTEM

1) REVENUE DEBT SERVICE COVERAGE RATIO This ratio shows revenue bond debt service cost divided by net revenue. Coverage ratios are used to determine the ability to meet revenue bond interest and principal payments. The higher the ratio, the stronger the security for the revenue bonds. The FY 2014 debt service coverage ratio of 1.66 was above the 1.6 KPI target. The ratio has exceeded the debt policy goal of 1.6 times coverage in six of the ten years reported. 2) PERCENTAGE OF DEBT FUNDED CAPITAL SPENDING This percentage shows the amount of debt used to fund capital programs divided by total capital spending for each five-year planning period. The District exceeded the KPI target of 65% or below between 2010 and 2012 as a result of the decision to take advantage of the 2010 Build America Bond program. The District funded capital expenditures primarily with revenue in 2013 and 2014 reducing the five-year average rate to 62% below the KPI target.

0.000.250.500.751.001.251.501.752.00

05 06 07 08 09 10 11 12 13 14

Coverage Ratio Debt Policy Goal

0%10%20%30%40%50%60%70%80%90%

05 06 07 08 09 10 11 12 13 14

% of Debt funded Capital Spending Target

1

WATER SYSTEM

3) RESERVE BALANCES The Reserve Balances indicate the District’s ability to meet unanticipated revenue declines or expenditure increases. The current reserve balance of $290.2 million exceeds the KPI target of $118.4 million established by the District’s Financial Reserve Policy. Balances in excess of the target will be used to fund the Water System Capital Program. In FY 2014, the water system deposited an additional $35 million in the Rate Stabilization Fund. 4) TOTAL ASSETS Total Assets have increased in the past ten years from $3.1 billion to $4.3 billion (historical cost). Total Assets have increased slightly in 2014. The amount of Net Capital Assets (e.g. buildings, pipelines, reservoirs, etc.) included in Total Assets increased in 2014 to $3.6 billion, or 84% of Total Assets.

0255075

100125150175200225250275300

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Actuals Target

0

500

1,000

1,500

2,000

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Assets

2

WATER SYSTEM

5) TOTAL REVENUE Total Revenue increased from $382 million in 2013 to $406 million in 2014, primarily due to the 9.75% increase in water rates. 6) OTHER REVENUES Other Revenues remained stable at $94.5 million in 2014, compared to $95.1 million in 2013.

050

100150200250300350400450

05 06 07 08 09 10 11 12 13 14D

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Total Revenue

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Sale of Fixed AssetsOtherCapital ContributionsGrantsProperty TaxesSystem Capacity Charge

3

WATER SYSTEM

7) OUTSTANDING DEBT BALANCES Outstanding Debt Balances over the last ten years have increased from $1.8 billion in 2005 to $2.6 billion in 2014. The increases are in line with increased capital spending to refurbish the Water System’s infrastructure, meet more stringent regulations, secure future water supply, and seismically strengthen the water distribution system. 8) NUMBER OF ACCOUNTS The District provides water to approximately 381 thousand accounts and a population of 1.3 million. The number of accounts has remained stable over the past 10 years. Accounts are classified as Residential, Commercial, Industrial and Public Authority (Institutional/Public Agencies).

0

500

1,000

1,500

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2,500

3,000

05 06 07 08 09 10 11 12 13 14D

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Outstanding Debt Balances

100125150175200225250275300325350375400

05 06 07 08 09 10 11 12 13 14

Thou

sand

s of

Acc

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s

Residential Commercial

Industrial Public Authority

4

WATER SYSTEM

9) PERCENTAGE OF BILLED REVENUE COLLECTED The District’s strong billing and collection process is reflected in the continuous high percentage of collections for all years. The net loss on uncollectible accounts decreased in 2014 and the uncollectible amount continues to be less than 1% of total revenue. 10) COMPARATIVE FY 2014 WATER RATES FOR SELECTED AGENCIES The comparative annual charges are for a typical single family residential account with a 5/8” meter using 246 gallons per day (10 Ccf per month). The District continues to meet its KPI target by maintaining rates at or below median range of similar water agencies while providing high quality water and service to its customers.

0100200300400500600700800900

1,000

In D

olla

rs

Palo Alto San FranciscoLivermore HaywardDublin-San Ramon Contra CostaNorth Marin ACWDEBMUD Marin MWDLos Altos San JosePleasanton

99.0%

99.2%

99.4%

99.6%

99.8%

05 06 07 08 09 10 11 12 13 14

Percentage of Billed Revenue Collected

Dro

ught

Rat

e

Dro

ught

Rat

e

Dro

ught

Pen

alty

5

WATER SYSTEM

11) FUNDED PENSION AND HEALTH BENEFIT OBLIGATION PERCENTAGE The funded percentage of the pension and health benefit obligation reflects the difference between the projected obligation and the actuarial value of assets (AVA) held by the retirement system. Figures shown are through the year ended June 30, 2013, the date of the last completed actuarial valuation report. As of that date, the funded percentage was 65.46%. The increase in the funded percentage is due to a strong return on the investment portfolio. 12) COMPARATIVE FY 2012 FUNDED PENSION AND HEALTH BENEFIT OBLIGATION FOR SELECTED AGENCIES The comparative funded percentage of pension obligation reflects the most current actuarial valuation as of fiscal year 2012. Most all of the listed county government agencies issued pension obligation bonds to increase their funding levels. The chart allows the reader to see the relative funding level of the agencies without those bonds. In addition, many of these agencies have unfunded retiree health insurance benefit liability that are not included, while EBMUD’s funding percentage includes HIB liabilities.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

EBMUD

Orange C

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osta C

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a County

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ater

LA County

Sonoma County

San D

iego C

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Sacram

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0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

100.0%

04 05 06 07 08 09 10 11 12 13

AVA Funded Percentage

6


WASTEWATER SYSTEM

Detail Section

WASTEWATER SYSTEM

1) REVENUE DEBT SERVICE COVERAGE RATIO This ratio shows revenue bond debt service costs divided by net revenue. Coverage ratios are used to determine the ability to meet revenue bond interest and principal payments. The higher the ratio, the stronger the security for the revenue bonds. The FY 2014 debt service coverage ratio of 1.6 meets the KPI target. The ratio has met the debt policy goal of 1.6 times coverage in six of the ten years reported. 2) PERCENTAGE OF DEBT FUNDED CAPITAL SPENDING This percentage shows the amount of debt used to fund capital programs divided by total capital spending for each five-year planning period. The District exceeded the KPI target of 65% or below the past 4 years as a result of the decision to take advantage of the 2010 Build America Bond Program. The District funded capital expenditures primarily with revenue in FY 2014 reducing the five-year average rate to 66% slightly above the KPI target.

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

05 06 07 08 09 10 11 12 13 14

Coverage Ratio Debt Policy Goal

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15%

30%

45%

60%

75%

90%

05 06 07 08 09 10 11 12 13 14

% of Debt Funded Capital Program Target

7

WASTEWATER SYSTEM

3) RESERVE BALANCES The Reserve Balances indicate the District’s ability to meet unanticipated revenue declines or expenditure increases. The reserve in 2014 is $58.5 million, which is greater than the KPI target of $20.6 million established by the District’s Financial Reserve Policy. Balances above the target will be used to fund the Wastewater System Capital Program. In FY 2014, the wastewater system deposited an additional $2.6 million in the Rate Stabilization Fund. 4) TOTAL ASSETS Total Assets increased in the last ten years from $579 million in 2005 to $796 million in 2014. Total Assets have decreased slightly from $798 million in 2013. The amount of Net Capital Assets increased slightly in 2014 to $677 million, or 85% of Total Assets.

0102030405060708090

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Actuals Target

500525550575600625650675700725750775800825

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Assets

8

WASTEWATER SYSTEM

5) TOTAL REVENUE Total Revenue increased from $102.4 million in 2013 to $108.2 million in 2014, primarily due to the 9% increase in wastewater rates. 6) OTHER REVENUES Other Revenues increased from $23.6 million in 2013 to $25.5 million in 2014. The increase was primarily due to growth of the Resource Recovery Program and additional Property Tax revenues.

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Property Taxes Resource RecoveryFacility Relocations Plant AdditionsOther

9

WASTEWATER SYSTEM

7) OUTSTANDING DEBT BALANCES Outstanding Debt over the ten-year period has increased from $319 million in 2005 to $449 million in 2014. 8) NUMBER OF ACCOUNTS The District provides wastewater treatment and sewage disposal service to approximately 175,467 accounts and a population of 650,000. The number of accounts has remained stable over the past 10 years.

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WASTEWATER SYSTEM

9) PERCENTAGE OF BILLED REVENUE COLLECTED The District’s strong billing and collection process is reflected in the continuous high percentage of collections for all years. The net loss on uncollectible accounts is minimal in 2014 and the uncollectible amount continues to be less than 1% of total revenue. 10) COMPARATIVE FY 2014 SEWAGE RATES FOR SELECTED AGENCIES The comparative wastewater annual rates shown are for single family residences. EBMUD charges are $320. EBMUD charges do not include charges for the collection system which are assessed by other agencies. Such charges range from $96 to $495. The average charge of $354 is indicated on the adjacent graph on top of the EBMUD charges. All other entities provide both collection and treatment services. For 2014, Wastewater did not meet its KPI target as the combined charge is above the median for agencies surveyed.

99.0%

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99.4%

99.6%

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05 06 07 08 09 10 11 12 13 14

Percentage of Billed Revenue Collected

___

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In D

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Central Marin San FranciscoPinole EBMUDRichmond VallejoLivermore Central Contra CostaDelta Diablo San JosePleasanton San Leandro

11

Policy 4.02

EFFECTIVE 12 JUL 05

CASH RESERVES AND DEBT MANAGEMENT SUPERSEDES 14 JUN 05

IT IS THE POLICY OF EAST BAY MUNICIPAL UTILITY DISTRICT TO: Maintain operating and self-insurance reserves necessary to provide ongoing working capital while maintaining a reasonable balance between debt and current revenue financing of capital projects. Adequate reserves and sound financial policies promotes the District's good standing in the capital markets; provides financing flexibility; avoids potential restrictive debt covenants; maintains markets for District debt; and facilitates future financing of capital projects at reasonable costs. Maintaining the balance between current funding sources and debt financing is critical to retaining the District's financing flexibility. Flexibility allows the District to use a variety of revenue or debt-financing alternatives, including issuing low cost variable rate and other revenue supported debt. Financial Goals

• Maintain operating reserves at a level sufficient to meet working capital and

unanticipated needs consisting of the following:

- Maintain Working Capital Reserve of at least 3.0 times monthly net operating and maintenance expenses.

- Maintain Self-Insurance Reserve at 1.25 times expected annual costs.

- Maintain Workers' Compensation Reserve equal to the estimated future

liability for Workers' Compensation claims.

- Maintain Contingency and Rate Stabilization Reserve for the Water System of 20 percent of projected annual water volume revenues and for the Wastewater System of 5 percent of operating and maintenance expenses.

• Maintain a balance between current funding sources and debt financing over

each five-year plan horizon:

- Debt Service Coverage Ratio: Maintain an annual revenue bond debt coverage ratio of at least 1.6 times coverage.

- Debt-Funded Capital Spending: Limit debt-funded capital to no more

than 65 percent of the total capital program over each five-year planning period.

- Commercial Paper/Variable Rate Debt: Limit to 25 percent of

outstanding long-term debt.

Authority

Motion No. 058-94, April 12, 1994 As amended by Resolution No. 33211-00, June 27, 2000 As amended by Resolution No. 33429-04, June 8, 2004 As amended by Resolution No. 33481-05, June 14, 2005 As amended by Resolution No. 33485-05, July 12, 2005

ANNUAL BUDGET PERFORMANCE FOR FISCAL YEAR 2014

East Bay Municipal Utility District Oakland, California

Cost Efficiency

FY14 ANNUAL BUDGET PERFORMANCE This report provides a budget analysis for the Water and Wastewater Systems of the East Bay Municipal Utility District for the Fiscal Year 2014. Our objectives in this report are to:

• Provide an analysis of revenues and expenditures compared to budget; • Monitor operating budget spending by departments; and • Provide a summary of major capital project expenditures.

These objectives are based on the Budget Office’s plan to monitor and report performance throughout the fiscal year.

Page 1 of 11

FY14 ANNUAL BUDGET PERFORMANCE WATER SYSTEM Summary of Revenues & Expenses Total Water System revenues were $473.3 million or 103% of fiscal year budgeted revenues of $458.3 million. Operating expenses and commitments including debt service totaled $369.0 million or 96% of the total amended budget of $383.7 million. Capital cash flow expenses totaled $189.6 million or 102% of the total budgeted cash flow of $186.1 million. This spending falls within the total appropriation approved by the Board.

189.6

369.0

473.3

186.1

383.7

458.3

0 125 250 375 500

Capital Expenses

Oper. Exps &Commitments

Revenues

Revenues & Expenses Water System

($ Millions)

Amended Budget Actual

Page 2 of 11

FY14 ANNUAL BUDGET PERFORMANCE Revenues Total Water System revenues were $473.3 million or 103% of total budgeted revenues of $458.3 million. Major variances were: • Water sales of $367.0 million were 104% of the $354.0 million budget. Water consumption was 167.5 MGD which is 0.5% less compared to 168.4 MGD for the previous year. Despite the record dry conditions of FY14 and increased consumption during the first eight months, voluntary reductions in the spring resulted in less water usage than in FY13. • Property tax receipts were $25.5 million or 109% of budget due to higher than anticipated tax receipts from the dissolution of redevelopment agencies. • Power revenue of $1.3 million was 23% of the $5.7 million budget. This decrease is due to less runoff for hydroelectric production as a result of the dry conditions. • Interest income of $1.5 million was 65% of the $2.3 million budget. This decrease is due to continued low interest rates. • All Other revenue of $24.0 million was 147% of budget primarily due to the unbudgeted sale of the Redwood Filter Plant for $5.6 million.

24.0

10.9

20.5

1.5

1.3

22.6

25.5

367.0

16.3

10.5

23.7

2.3

5.7

22.4

23.4

354.0

0 100 200 300 400

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OperatingReimbursements

SCC Revenues

Interest Income

Power

Seismic Charges

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Water Sales

Revenue Comparison Water System

($ Millions)

Amended Budget Actual Revenue

Page 3 of 11

FY14 ANNUAL BUDGET PERFORMANCE Operating Expenses and Commitments Operating expenses and commitments for the fiscal year totaled $226.7 million or 96% of the total budget of $236.2 million. The decrease in spending is primarily attributable to operating costs trending less than budget, and higher than budgeted administrative reimbursement for capital projects of $3.8 million which decrease operating expenses by a like amount. Debt service totaled $142.3 million or 96% of the $147.5 million budget primarily due to lower interest rates than anticipated.

236.2

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226.7

142.3

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Expense Comparison Water System

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Amended Budget Actual Expense

Page 4 of 11

FY14 ANNUAL BUDGET PERFORMANCE Department Expenditures Department expenditures totaled $277.2 million or 101% of the total budget of $275.4 million, but were offset by savings within the Water System. Operating expenses were higher than budget primarily due to the cost associated with the purchase, treatment and delivery of supplemental water. Year-to-date expenditures by department are summarized in the following chart.

83.0, 30%

54.5, 20%

23.6, 8%

22.1, 8%

18.0, 7%

16.9, 6% 14.5, 5% 13.9, 5%

8.7, 3%

6.4, 2% 5.2, 2%

5.0, 2% 4.9, 2% 0.6, 0%

Department Operating Expense Water System

($ Millions)

Maintenance & ConstructionWater OperationsInformation SystemsFinanceCustomer & Community ServicesOperations & Maintenance SupportEngineering & ConstructionNatural ResourcesHuman ResourcesWater ResourcesOffice of the General ManagerWater RecyclingOffice of General CounselAdministration

Page 5 of 11

FY14 ANNUAL BUDGET PERFORMANCE Capital Expenditures and Commitments

For the fiscal year, capital cash flow expenditures totaled $189.6 million or 102% of the total budgeted cash flow of $186.1 million. Of this amount, direct costs associated with capital projects totaled $150.8 million and the remaining $38.8 million represents administrative and general costs. Major FY14 capital expenditures are summarized in the following chart.

25.1

17.8

9.0

8.8

8.3

8.0

8.0

7.1

Major Capital Expenditures * Water System

($ Millions)

Pipeline Infrastructure Renewals - $25.1

Large Diameter Pipelines - $17.8

Service Lateral Repl Polybutylene - $9.0

New Service Installation - $8.8

Reservoir Rehab / Maintenance - $8.3

Treatment Plant Upgrades - $8.0

Pumping Plant Rehab - $8.0

Central Oakland Hills Cascade - $7.1

* direct costs only

Page 6 of 11

FY14 ANNUAL BUDGET PERFORMANCE WASTEWATER SYSTEM Summary of Revenues & Expenses Total Wastewater System revenues were $114.5 million or 104% of fiscal year budgeted revenues of $109.6 million. Operating expenses and commitments including debt service totaled $92.8 million or 98% of the total budget of $94.5 million. Capital cash flow expenses totaled $32.9 million or 104% of the budgeted cash flow of $31.5 million. This spending falls within the total appropriation approved by the Board.

32.9

92.8

114.5

31.5

94.5

109.6

0 30 60 90 120

Capital Expenses

Oper. Exps &Commitments

Revenues

Revenues & Expenses Wastewater System

($ Millions)

Amended Budget Actual

Page 7 of 11

FY14 ANNUAL BUDGET PERFORMANCE Revenues Total Wastewater System revenues for the fiscal year totaled $114.5 million or 104% of the budgeted amount of $109.6 million. Major variances were: • Treatment Charges and Permits totaled $61.8 million or 97% of the $63.4 million budget. The decrease was primarily attributable to voluntary conservation by customers. • Revenues for Resource Recovery totaled $10.6 million or 151% of the $7.0 million budget due to continued business above the budgeted level. • Property tax and ad valorem bond levy proceeds were $9.9 million or 119% of the $8.3 million budget due to higher than anticipated receipts a portion of which is attributable to the dissolution of redevelopment agencies. • Interest income of $0.2 million was 50% of the $0.4 million budget. This decrease is due to continued low interest rates. • Operating Reimbursements were $1.6 million or 178% of the $0.9 million budget due to unplanned work performed by the Wastewater System for the Water System concerning recycled water issues. • All Other revenue and Capacity Charges totaled $7.1 million or 116% of the $6.1 million budget due to a $0.7 million settlement, and higher than budgeted power sales and private sewer lateral fees.

7.1

1.6

3.9

0.2

9.9

19.4

10.6

61.8

6.1

0.9

3.7

0.4

8.3

19.8

7.0

63.4

0 25 50 75

All Other & Capacity

OperatingReimbursements

Lab Services

Interest Income

Taxes & Ad Valorem

Wet Weather

Resource Recovery

Treatment Chgs. &Permits

Revenue Comparison Wastewater System

($ Millions)

Amended Budget Actual Revenue

Page 8 of 11

FY14 ANNUAL BUDGET PERFORMANCE Operating Expenses and Commitments Operating expenses and commitments for the fiscal year totaled $59.7 million or 98% of the budgeted amount of $60.8 million. The decrease in spending is primarily attributable to operating costs trending less than budget, but was offset by lower than budgeted administrative reimbursement for capital projects of $0.3 million which increased operating expenses by a like amount. Debt service totaled $33.1 million or 98% of the budgeted amount of $33.7 million.

60.8

33.7

59.7

33.1

0

15

30

45

60

75

Operating Debt Service

Expense Comparison Wastewater System

($ Millions)

Amended Budget Actual Expense

Page 9 of 11

FY14 ANNUAL BUDGET PERFORMANCE Capital Expenditures and Commitments Capital cash flow expenditures totaled $32.9 million for the fiscal year or 104% of the budgeted cash flow of $31.5 million. Of this amount, direct costs associated with capital projects totaled $29.9 million and the remaining $3.0 million represents administrative and general costs. Major FY14 capital expenditures are summarized in the following chart.

5.3

5.2

4.2

4.1

3.7

Major Capital Expenditures * Wastewater System

($ Millions)

Treatment Plant Infrastructure - $5.3

Wood St. Sewer Interceptor - $5.2

Infiltration/Inflow Control - $4.2

Digester Upgrade - $4.1

Routine Capital Equip Replacement - $3.7

* direct costs only

Page 10 of 11

FY14 ANNUAL BUDGET PERFORMANCE GRANTS AND LOANS SUMMARY GRANTS The District submitted six new grant applications totaling approximately $8.0 million; all six grants were awarded. The following are the grant awards for FY14: Chabot Dam Seismic Upgrade Reduce the flood hazard that lie downstream of the dam, and preserve the recreational resources. Camanche Area Regional Water Supply Program (UMRWA) Construct a 0.5 MGD water treatment plant. East Bayshore (Phase 1A) Recycled Water Pipeline Extend the East Bayshore recycled water pipeline to increase recycled water deliveries to Emeryville. Nutrients Reduction in SF Bay Investigate nutrient reduction through the treatment of nutrient-rich internal recycle streams at treatment plants. Home Water Report Program Provide customers with individualized water use reports. NDMA Formation Study Co-funding agreement with Las Vegas Valley Water District to study nitrosodimethylamine formation at water treatment facilities. LOANS No loan applications were submitted or awarded in FY14. In addition, during FY14 the District monitored and administered approximately $34.2 million in grants and $30.1 million in loans previously submitted or awarded.

5.00

1.21 1.00

0.52

0.24

-

1.0

2.0

3.0

4.0

5.0

Grant Awards ($ Millions)

Page 11 of 11

STRATEGIC PLAN KEY PERFORMANCE INDICATORS

FOR FISCAL YEAR 2014

Based on the July 2012 Strategic Plan


Table of Contents

Introduction .............................................................. 2

Strategic Plan Goals .................................................. 2

Long Term Water Supply ........................................... 3

Water Quality and Environmental Protection ........... 7

Long Term Infrastructure Investment ...................... 9

Long Term Financial Stability ................................. 11

Customer Service .................................................... 13

Workforce Planning and Development ................... 15

Key Performance Indicator Summary..................... 17

1

INTRODUCTION This Key Performance Indicators (KPI) report measures the District’s performance against its targets as a means to evaluate progress in meeting our goals as outlined in the Strategic Plan, and identifies our targets for the upcoming fiscal year. There are 43 KPIs currently being tracked and these are displayed by Strategic Plan goal. A summary of all the KPIs, along with our performance from FY10 through FY14, is shown on the last pages. This report is based on the July 2012 Strategic Plan. A revised plan dated July 2014 was recently adopted and will be the basis for reporting on the FY15 KPIs. STRATEGIC PLAN GOALS The KPIs have been established for the six goals outlined in the Strategic Plan:

• Long Term Water Supply Ensure a reliable high quality water supply for the future.

• Water Quality and Environmental Protection Meet or surpass environmental and public health standards and protect public trust values.

• Long Term Infrastructure Investment Maintain and improve the District’s infrastructure in a cost effective manner to ensure sustainable delivery of reliable, high quality service now and in the future.

• Long Term Financial Stability Manage the District’s finances to support District needs and maintain reasonable water and wastewater rates.

• Customer Service Understand and be responsive to customer expectations for service.

• Workforce Planning and Development Ensure ample talent to do the District’s work today and tomorrow.

2

LONG TERM WATER SUPPLY The District has a goal to ensure a reliable, high quality water supply for the future. As detailed in the 2010 Urban Water Management Plan (UWMP) adopted by the Board of Directors in June 2011, existing water supplies are insufficient to meet current and future customer needs during times of drought. In addition to increased water conservation and water recycling, preserving current entitlements and developing new supplemental water supplies are necessary to limit customer rationing to 15% during a multiple year drought. The following KPIs measure our progress in achieving our long term water supply goal.

Key Performance Indicator

FY14 Target

FY14 Performance

FY14 Target

Met?

FY15 Target

Supplemental Supply • 32 MGD of new

supplemental dry years supply by 2040

• Sufficient supplies to

hold rationing to a maximum of 15% during next 3 years, based on projected demand and drought planning sequence

• Develop an agreement

with Placer County Water Agency to implement a long-term water transfer project

• Complete the Yuba Accord-Freeport Point of Rediversion Project

• Complete Phase II water transfer agreement with BAWSCA to complete permits and CEQA, and related agreements

• Execute MOU with

San Joaquin County to develop groundwater banking demonstration project

• Long-term water

transfer project MOU executed on 8/15/13

• Project completed on 6/9/14 when the State Water Board approved adding Freeport as a point of rediversion to Yuba County’s water rights permits

• BAWSCA Phase II MOU executed on 2/3/14 to develop agreements and permitting for pilot water transfer

• Executed MOU for demonstration project with San Joaquin County on 9/24/13

++

++

++

++

• Proceed with

permitting and environmental review processes for Placer County Water Agency/ EBMUD long term water transfer

• Execute BAWSCA water transfer (if Freeport operated)

• Execute an

implementation agreement for groundwater banking demonstration project with San Joaquin County

Water Conservation • 39 MGD savings

from conservation programs/natural replacement by 2040

• 1.2 MGD avg. annual

conservation savings • 18% reduction in per

capita demand by 2018; 20% by 2020

• Implement Water Conservation Master Plan (WCMP)

• Achieve MOU Best Management Practice compliance

• Exceeded 1.2 MGD

savings (mainly thru natural savings and drought response)

• Ahead of schedule to meet per capita reductions

• FY14 WCMP measures fully implemented

• In compliance with state Best Management Practice MOU

++

• 1.2 MGD avg. annual

conservation savings • 18% reduction in per

capita demand by 2018; 20% 2020

• Achieve MOU Best Management Practice compliance

3


FY14 Target

FY14 Performance

FY14 Target Met?

FY15 Target

Water Recycling • 11 MGD of recycled

water capacity by 2040

• Complete design of

East Bayshore Emeryville/Christie pipeline

• Complete East Bayshore on-site treatment study

• Initiate study of alternatives at North Richmond, RARE, or West County to improve water quality

• Coordinate with

USACE to determine next opportunity to expand San Ramon Valley Recycled Water Project if funding is available

• Design of East

Bayshore Emeryville / Christie pipeline is in progress and will be completed in FY15

• Completed East Bayshore on-site treatment study to remove odor

• Completed preliminary study of alternatives at North Richmond, RARE, and West County to improve water quality

• Instead of moving forward with USACE on Bishop Ranch expansion project, applied for state drought relief grant to construct this project

+

++

++

+

• Begin construction of

East Bayshore Emeryville/Christie pipeline pending final funding agreement w/State

• Conduct East Bayshore expansion study

• Complete study of alternatives at North Richmond, RARE, or West County to improve water quality

• Continue to expand San Ramon Valley Recycled Water Project including Bishop Ranch if funding is available

Climate Change • Update the Climate

Change Monitoring and Response Plan to include new information. Explore approaches for how to adapt to potential future conditions and identify “no regrets” infrastructure investment decisions

• Update the Climate

Change Monitoring & Response Plan to account for new information when the Intergovernmental Panel releases its Fifth Assessment Working Group I and II Reports

• A draft update to the

plan has been completed

+ • Update the Climate

Change Monitoring & Response Plan to account for new information when the Intergovernmental Panel releases its Fifth Assessment Working Group III Report. Complete climate change assessment using the EPA’s Climate Resilience Evaluation and Assessment Tool

++ Target met +Target not met, but on track --Target not met #Target/Data not available = Performance measure only

Supplemental Supply: The 2012 WSMP 2040 identifies a portfolio of resources to secure an additional 32 MGD of supplemental supply by 2040 including water transfers, the Bayside Groundwater Project Phase II, regional desalination, and a potential partnership with Contra Costa Water District on its expansion of Los Vaqueros Reservoir. It builds on significant achievements, namely construction of the Freeport Regional Water Project and the Bayside Groundwater Phase I facilities, and completion of the Regional Desalination Pilot Project. In FY14 significant progress was made toward developing long-term water transfer arrangements

4

with Placer County Water Agency (PCWA) and Yuba County Water Agency (YCWA) and working with the Bay Area Water Supply and Conservation Agency (BAWSCA) to develop a pilot water transfer to wheel water through EBMUD’s system for delivery to BAWSCA. The PCWA-EBMUD long-term water transfer MOU provided the foundation for EBMUD to purchase 5,000 acre-feet of transfer water from PCWA for Freeport testing and supplemental water supply needs in FY14. Progress was also made in moving forward with an engineering design of a groundwater banking demonstration project in partnership with San Joaquin County. Water Conservation: In FY14, we continued implementation of conservation measures included within the six strategies identified in the 2011 Water Conservation Master Plan (WCMP). Customers continued to achieve substantial water savings through their individual drought response including participation in District indoor and outdoor conservation incentives, water use and leak detection surveys, and education programs. Overall conservation savings remained higher than long-term annual averages due to ongoing demand reductions from the drought, the extended economic recovery, and heightened interest in water efficient technologies and practices. The FY14 baseline WCMP conservation programs include targeted savings and per capita water use reductions required to achieve compliance with the Water Conservation Act of 2009 and the California Urban Water Conservation Council Statewide Memorandum of Understanding for best management program reporting. Water Recycling: The target for water recycling is an additional 11 MGD by the year 2040 or a total of 20 MGD by the year 2040 to reduce the demand for potable water. Recycled water use of about 9 MGD is achieved through a combination of irrigation and industrial reuse projects. Existing recycled water uses include refinery cooling towers and boiler feedwater; golf course irrigation in Alameda, Oakland, Richmond and San Ramon; parkway irrigation in Alameda; office building bathroom flushing in Oakland; office building cooling in Emeryville and landscape irrigation in various areas of Oakland, Emeryville and San Ramon. In FY14, progress was made on design of the East Bayshore Emeryville/Christie pipeline which was approved by the state for a $1 million grant for construction. The East Bayshore on-site treatment pilot to remove odor in recycled water for indoor applications was completed. A preliminary evaluation of improvements and expansion alternatives at North Richmond and RARE due to West County water quality was conducted. The next phase of the San Ramon project in Bishop Ranch for state drought relief grant funding was developed. In addition, several sites were connected to the recycled water system including Pixar for cooling tower application, and Caltrans and Preservation Park for landscape irrigation. The long-term recycled water supply agreement between DERWA and Pleasanton was completed, and the satellite recycled water feasibility study with the Diablo Country Club was completed. Climate Change: This KPI ensures the District’s future water supply, water quality, and infrastructure planning incorporates adaptation to and mitigation of climate change. A draft update to the Climate Change Monitoring & Response Plan has been generated to account for new information. New or revised recommended actions include:

• Inventory the District’s greenhouse gas emissions annually; • Investigate new renewable energy projects consistent with Energy Policy 7.07; and • Update the District’s Energy Management Strategy.

5

The latest update to the Climate Change Monitoring and Response Plan summarizes the District’s work on climate change, information from the latest Intergovernmental Panel on Climate Change’s Fifth Assessment Report, and information in the 2014 US National Climate Assessment Report. This information was presented at the June 24, 2014 Sustainability/Energy Committee meeting.

6

WATER QUALITY AND ENVIRONMENTAL PROTECTION Protecting the environment, public health, and public trust values requires a comprehensive approach that addresses the quality of the water we treat and distribute, and the vitality of our natural resources. The District’s success in protecting the environment is measured by meeting established environmental protection standards and reducing emissions from both District operations and from the services and commodities it uses. Protecting public health is measured by meeting self-imposed water quality goals that surpass regulatory standards to ensure high quality water. Protecting public trust values is measured by meeting minimum flow requirements in the Mokelumne River below Camanche Dam. The vitality of the natural resources is measured by the number of fish returning to the Mokelumne River.


FY14 Target

FY14 Performance

FY14 Target Met?

FY15 Target

Watershed Protection • Mokelumne River Fall-Run

Chinook Salmon Escapement (long term average)

• % of JSA Mokelumne River Minimum Flow Releases Met

4,514

100%

8,873

100%

++

++

4,634

100%

Compliance with Drinking Water Regulations • % of Water Quality Goals

Met • % of Water Quality

Regulations Met

100%

100%

96%

100%

+

++

100%

100%

Compliance with Wastewater Regulations • Number of NPDES and

Waste Discharge Permit Notices of Violation Received

0

2

+

0

Reduce, Recycle, Reuse, Reclaim • 10% Net Reduction in GHG

Emissions from District Facilities over 2000 Baseline by 2015 (calendar years)

<41,438 metric tons

31,244 metric tons

++

New KPI

Protect SF Bay • Implement source

identification to understand the loading of PCBs in the MWWTP influent

• Completed in

FY13; No activity in FY14; New KPI for FY15

n/a

#

New KPI

++ Target met +Target not met, but on track --Target not met #Target/Data not available = Performance measure only Watershed Protection: The FY14 target for the number of fish returning (escapement) to the Mokelumne River was based on the 1940 to 2012 long-term average. The FY14 performance represents the average escapement from 2008 to 2013, which is a six-year (2 cohorts) running

7

average. The escapement for FY14 alone was 12,772 fish, which is slightly more than FY13 and the 4th largest escapement recorded in the Mokelumne River since 1940. Through the Lower Mokelumne River Partnership, the District initiated adaptive management actions including pulse attraction flow events in October and November 2013. As a result of these actions, the total return to the Mokelumne was 275% of the long-term average, which was greater than any San Joaquin River tributary. Moreover, the Mokelumne River Fish Hatchery produced roughly 5 million juvenile Chinook salmon. The target for FY15 may be revised in the future as resource agencies focus on in-river production versus production in hatcheries. Currently, most of the escapement on the Mokelumne is comprised of hatchery raised fish. Compliance with Drinking Water Regulations: The District voluntarily sets over 100 annual water quality goals that far surpass federal and state standards. In FY14, the District again met 100% of State and Federal regulations, and met 114 of 119 or 96% of its more stringent water quality goals, matching FY13 (96%) and similar to FY12 (98%). The water quality parameters not meeting goals were Total Trihalomethanes (TTHMs), Haloacetic Acids (HAAs), Turbidity, Total Coliform (TC) and emerging contaminants N-Nitrosodimethlyamine (NDMA). Details concerning these issues were contained in the Water Quality Program Semi-Annual Update that was presented to the Planning Committee in September 2014. Compliance with Wastewater Regulations: The goal is to have no violations of the 24 NPDES and Waste Discharge Requirements permits issued by the Regional Water Quality Control Boards (RWQCBs). In June 2014, the District accepted the San Francisco RWQCB’s offer to participate in the expedited payment program for non-routine discharge violations and paid $6,000 in penalties for exceeding the total chlorine residual limit in discharges from the Lafayette water treatment plant in May 2012 and March 2013. One incident was caused by a contractor and the second was the result of an incorrectly installed valve. Reduce, Recycle, Reuse, Reclaim: The goal is to reduce greenhouse gas emissions from District facilities. During calendar year 2013 the District emitted 31,244 metric tons of CO2, similar to the 31,106 emitted in 2012, and less than the FY14 target. The slight increase is due to an increase in PG&E emissions factor and a two percent increase in energy consumption over the previous year. Protect SF Bay: In FY13, the District achieved the goal of investigating, identifying, reducing and abating controllable sources of PCBs to the Main Wastewater Treatment Plant. Therefore, no work was performed related to this KPI in FY14. As part of the development of the July 2014 Strategic Plan, the following new KPI was adopted for FY15 for Protect SF Bay: “Implement Private Sewer Lateral Program to reduce wet weather flows and achieve a high compliance rate at point of sales.”

8

LONG TERM INFRASTRUCTURE INVESTMENT The level of investment to maintain and improve our infrastructure in a cost-effective manner is reflected in the long-term reliability of service to customers and the performance of our assets. The KPIs track events that impact customer service, as indicators of the appropriateness of the ongoing level of investments.


FY14 Target

FY14 Performance

FY14 Target Met?

FY15 Target

Master Planning • Number of Master Plans Completed or

Updated

2

3

++

New KPI

Effective Management of Infrastructure • Unplanned Water Service Interruptions

per 1,000 Active Accounts o <4 hours

o 4-12 hours

o >12 hours

• Number of Water System Pipeline

Breaks per 100 Miles of Pipe • Availability of Wastewater Assets

≤10

≤ 5

≤ 2

< 20

.90 - 1.0

7.1

4.9

1.3

23.3

.97

++

++

++

-- ++

≤10

≤ 5

≤ 2

< 20

.90 - 1.0

Capital Budget Priorities

• Miles of distribution pipe replaced • Design errors and omission change

orders on construction contracts • Award construction contracts to

rehabilitate steel tanks • Completion of a comprehensive

condition assessment of the wastewater interceptor system before 2016

10

< 3%

3

Completed in FY13; No activity in FY14; New KPI for FY15

11.0

1.7%

6

n/a

++

++

++

#

10

< 3%

3

New KPI


Master Planning: The District has 37 master plans covering the Water and Wastewater System infrastructure. In addition, tools were developed including the Coordinated Infrastructure Master Planning Guidance Manual to better organize these plans to ensure they are comprehensive and coordinated. During FY14 the target was to complete two master plans. Three master plans were completed: the Raw Water Master Plan, Large Diameter Pipeline Master Plan – Technical Memorandum 1, and an update to the Distribution System Pipeline Master Plan.

9

Three master plans are scheduled to be completed and/or updated in FY15: the new Wastewater Pump Station Master Plan, and updates to the Distribution System Pipeline Master Plan and Distribution System Master Plan for Major Water Facilities. Starting in FY15 we will no longer report on the number of master plans completed as a number of new infrastructure related key performance indicators were adopted as part of the July 2014 Strategic Plan. Effective Management: Effective management of the infrastructure is measured by: 1) unplanned water service interruptions per 1,000 accounts; 2) number of water system pipeline breaks per 100 miles of pipe; and 3) the availability of wastewater assets. For FY14, the targets were met for minimizing the impacts to customers from unplanned service interruptions although the number of interruptions was greater than in FY13. For the 4,197 miles of pipe in the system, we experienced a total of 979 breaks which yields 23.3 breaks/100 miles of pipe. This is an increase from the 809 pipe breaks in FY13 and the 918 breaks that were experienced in FY12. We will keep tracking this statistic and are conducting a pilot Pipeline Replacement Study to increase the miles of pipe replaced. Availability of Wastewater assets tracks the availability of Wastewater equipment and facilities. It is measured by calculating the total annual equipment days minus total annual equipment “breakdown” days, divided by the total annual equipment days. During FY14, the ratio was 0.97 which met the target and was the same for the prior two fiscal years. Capital Budget Priorities: Pipeline replacements totaled 11.0 miles in FY14, similar to the 11.1 miles in FY13 and greater than the 9.1 miles replaced in FY12. Design errors and omissions change orders on Water and Wastewater System contracts were 1.7 percent on contracts valued at $52.5 million (Water System: 1.8 percent on contracts worth $44 million; Wastewater: 0.9 percent on contracts worth $8.5 million). Contracts to rehabilitate or demolish six steel reservoirs were awarded. Woods Reservoir was rehabilitated and Crossroads, Trilane, Sunset, Pinehaven No. 1, and Pinehaven No. 2 reservoirs were demolished. Reservoir demolitions benefit the District by removing hazardous materials, reducing maintenance costs, and improving water quality by reducing storage in the distribution system. In Wastewater the interceptor condition assessment was completed in FY13. Therefore, no work was performed related to this KPI in FY14. As part of the development of the July 2014 Strategic Plan, the following new KPI was adopted for FY15: the “% of interceptor assets repaired that have major defects.”

10

LONG TERM FINANCIAL STABILITY Long term financial stability is critical to our mission of providing reliable, high quality service at fair and reasonable rates. To achieve our goal we have identified strategies aimed at ensuring sufficient revenue to support District needs, maintaining a strong financial position, maintaining the integrity of our financial systems, and making the best use of every dollar spent. The following KPIs measure our progress in achieving these financial strategies and objectives.


FY14 Target

FY14 Performance

FY14 Target Met?

FY15 Target

Sufficient Revenue/Fair Rates & Charges • Rates as compared to

other Bay Area Agencies

At or below median - Water

At or below median - Wastewater

Water - below

median, 12 other agencies surveyed

Wastewater – above median, 15 other

agencies surveyed

++

--

At or below median - Water

At or below median - Wastewater

Financial Position • % of Capital Program

Funded from Debt

• Debt Service Coverage

• Actual Reserves as % of

Target

≤ 65%

≥ 1.6 times coverage


≥ 100%

62% Water 66% Wastewater 1.66 Water 1.60 Wastewater >100% Water >100% Wastewater

++ +

++ ++

++ ++

≤ 65%



≥ 100%

Integrity of Financial Systems • % of Planned Audits

Completed • % of Audit Findings

Resolved within 90 Days

100%

100%

40%

100%

--

++

100%

100%

Budget Performance • Operating Expenditures

as a Percentage of Operating Budget

• Capital Expenditures as a Percentage of Capital Budgeted Cash Flow

< 100%

< 100%

96% Water

98% Wastewater

102% Water

105% Wastewater

++ ++

+ +

< 100%

< 100%


Sufficient Revenue/Fair Rates & Charges: An indicator of fair rates and charges is how our rates compare with other Bay Area agencies. For FY14, our water rates were below the median as 8 of the 12 other agencies surveyed had higher rates. Our wastewater rates were above the median as just 3 of the 15 other agencies surveyed had higher rates. Our wastewater rate includes additional charges such as the SF Bay Residential Pollution Prevention Fee, Wet Weather Fee and an average community collection charge that represents more than 50% of the overall rate.

11

Financial Position: Our financial policies specify targets for measuring our financial position. The percent of the Water System capital program funded by debt over the last 5 years was 62% which is the same as last year’s 5-year average. The percent of the Wastewater System capital program funded by debt slightly exceeded the target at 66%, down from 78% last year as the District used bond proceeds from the Build America Bonds to fund capital expenses. This trend of funding the capital program with more rate revenue will continue. The measure for reserves is the percentage variance between the reserve target and actual reserve levels at the end of FY14. The target reserve levels of $118.4 million for Water and $20.6 million for Wastewater were exceeded due to higher than anticipated revenues and lower operating costs. The additional reserves were deposited in the rate stabilization fund. The District has a policy target of 1.6 times debt service coverage. The Water System FY14 debt coverage ratio was 1.66 which met the target, but is less than the 1.71 in FY13. The Wastewater System FY14 debt coverage ratio was 1.60 which met the target and is similar to the 1.59 in FY13. Integrity of Financial Systems: These measures refer to monitoring the procedures and controls in place for asset accountability, financial reporting and compliance. Four audits were conducted during this period and substantial progress was made on three additional audits. Three audits were included in the original FY13 Internal Audit plan, and a fourth review was subsequently added at the Board’s request. The audit of financial transactions that was added extended the schedules for other audits. The three audits listed in the FY14 plan that were not initiated are included in the FY15 plan. Detailed reports of the audits completed and the results from each were provided as part of the Annual Internal Audit Report that was presented to the Finance/Administration Committee in July 2014. There were no outstanding audit findings reported during the period or outstanding from prior periods that needed to be resolved. Budget Performance: This KPI measures the variance between spending and the approved budget, with a target for expenditures to not exceed 100% of the operating and capital budget including debt service. The FY14 Water System operating expenditures were 96% of budget, compared to 88% in FY13. The FY14 Wastewater System operating expenditures were 98% of budget, compared to 95% in FY13. Capital budget spending was slightly over the target for the Water System at 102% as the cost of administering the capital work was greater than planned. Capital spending was greater than budget for the Wastewater System at 105%. Spending for the Digester Upgrades project was greater than planned as it included work that was originally budgeted in FY12-13, but experienced contractor delays; the Concrete Rehabilitation project spending was greater than anticipated as construction was accelerated on repairing the plant effluent channel; and change orders under the Wood Street Interceptor project added costs. Water and Wastewater capital spending fell within the total amount of appropriations approved by the Board.

12

CUSTOMER SERVICE To be responsive to customer expectations for service the District’s web, phone and e-mail services must be accessible. Field stops are also scheduled to investigate customer service concerns. Customers are periodically surveyed to better understand and evaluate the effectiveness of these efforts. Measurement of the following KPIs provides a picture of how the District is responding in areas important to customers, and the performance targets can be adjusted based upon the customer feedback obtained.


FY14 Target

FY14 Performance

FY14 Target Met?

FY15 Target

Customer Satisfaction • % of Customers Rating “Overall

Job” as “Good” or “Excellent” • % of Customers Rating the

District’s Telephone Response as “Good” or “Excellent”

• % of Customers Rating the District’s Field Response as “Good” or Excellent”

• % of Time Customer Dependent Systems are Available

70%

90%

90%

99.9%

61%

96%

94%

99.85%

--

++

++

+

70%

New KPI

90%

99.9%

Emergency Preparedness • Update the District’s Emergency

Operations Plan every two years and conduct an EOT exercise annually

• Update all Business Continuity Plans every two years and conduct an exercise for each annually

100%

100%

100%

100% Plans 100% Exercises

++

++

100%

100%


Customer Satisfaction: There are four components that measure customer satisfaction. The first is the percentage of surveyed customers rating the “overall job EBMUD is doing” as “good” or “excellent”. A survey was conducted in FY14 and 61% rated the District’s performance as good or excellent. We have been told that during times of drought, ratings of water agencies tend to drop. No survey was conducted in FY11 through FY13 due to budget constraints. The second and third measures involve ratings of our telephone and field response, captured by “point-of-service” surveys of customers who had experience with our contact center and field services. For FY14, we received a 96% telephone rating of “Good to Excellent” which is slightly better than the 94% received in FY13 and the 93% in FY12. In FY14 a total of 99 field service survey responses were completed compared to 116 in FY13, and 94% rated service as “Good to Excellent” which is similar to the 93% in FY13. In FY13-14, the District started charging for field inspections which resulted in a 32% decrease in the number of inspections completed. Staff was encouraged to leave cards after every inspection and received a response from 8% of our customers.

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The fourth measure involves the percent of time our automated systems used by customers are available. Average availability of these systems (Internet, Call Center and Dispatch Center telephones, Customer Information System, and Integrated Voice Response self-service applications) is determined by tracking the hours of unplanned down time. The FY14 target was almost met. In January 2014, our primary data storage system experienced major issues and took 4 business days to fully recover. During that time the customer billing system (Customer Watch) was unavailable. The Contact Center phones were available and customer calls were answered, except some of the functions such as looking up customer accounts were not available. Also, the Interactive Voice Response system was not functional due to its dependency on the Customer Watch application. Emergency Preparedness: This KPI is a measure of the District’s ability to maintain an active emergency preparedness program by maintaining current documentation and testing of emergency response and business continuity plans. In FY14, the District met its KPIs for emergency preparedness and business continuity. The Emergency Operations Plan was revised in 2012 and will be updated in 2014. The District conducted or participated in 39 exercises, tests and drills including a functional exercise of the Emergency Operations team in FY14. The KPI for updating BCPs every two years and conducting exercises for each BCP once a year was met. This is the second year in a row of meeting this KPI. Details concerning business continuity were contained in the Annual Readiness Report and Program Update presented to the Planning Committee in July 2014.

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WORKFORCE PLANNING AND DEVELOPMENT Labor market and demographic trends indicate that a critical shortage of skilled workers will continue as a result of retiring Baby Boomers and changes in the educational background and skills of younger workers. In response to these challenges, EBMUD has been developing strategies to recruit qualified applicants and retain and develop our existing employees. The KPIs for this goal will help to keep us on track to ensure we have a qualified, well-trained and effective workforce to meet both current and future needs.


FY14 Target

FY14 Performance

FY14 Target Met?

FY15 Target

Recruitment • % of Exams Resulting in Hiring

Lists within 60 Days • % of District Eligibility Lists with

AA Hire Opportunities

75%

93%

61%

++

75%

Employee Development • % of Competing Leadership

Program Graduates Who Place on Applicable Promotional Lists

• Annual Average Training Hours per Employee

75%

30

55%

28.5

--

+

75%

30

Performance Planning & Appraisal • % of Performance Plans

Completed on Time • % of Performance Appraisals

Completed on Time

100%

100%

98.6%

98.4%

+ +

100%

100%

Employee Retention • Employee Injury & Illness Lost

Time Incidence Rate • Turnover Rate

≤3.0

2.2

8.9%

++

≤3.0

New KPI


Recruitment: The percent of exams resulting in hiring lists within 60 days is a measure of our hiring process, and is based on the number of days elapsed from the close of application filings to the establishment of eligible lists. In FY14, there were 98 exams completed and 91 resulted in hiring lists within 60 days. Staff completed 26 more recruitments than in FY13 and the percent resulting in hiring lists rose from 74 percent to 93 percent. The District tracks the diversity of candidates considered for employment to determine if recruitment efforts are attracting sufficiently diverse qualified candidates. During the last fourteen years, the District achieved an average AA Opportunity rate of 55 percent (The AA Opportunity Rate is the percentage of qualified underutilized candidates of the total qualified candidates considered during the hiring interviews). In FY14, the AA Opportunity Rate was 61 percent which was greater than the FY13 rate of 49 percent, and similar to the FY12 rate of 63 percent. This KPI does not measure the diversity of candidates actually hired. We report performance on this measurement, but do not set targets.

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Employee Development: The percentage of competing leadership program graduates placed on applicable promotional lists measures the effectiveness of our various developmental academies (e.g., LEAD, Pathways, and Management Leadership). During FY14, 55 percent of academy graduates scored as eligible on promotional lists. For FY15, staff is taking corrective action to modify existing curriculum and provide additional support to the thirty employees that completed the two LEAD academies in FY14. The annual average number of training hours per employee is a common indicator benchmarked by other employers. For example, the American Society for Training and Development reports an average of 28 hours per year per employee among organizations surveyed, and an average of 38 hours per year per employee for Best Practice Organizations. Our FY10-FY14 five-year average was 28.5 hours annual training per employee, down from last year’s average of 31 hours. Due to the fiscal challenges facing the District, travel and non-mandatory training budgets were reduced starting in FY10. Performance Planning & Appraisal: This KPI is measured by the percent of employees with performance plans and appraisals completed within the past 13 months. In FY14, 98.4 percent of employees had a current appraisal. The number of current appraisals is down slightly from FY13 when 98.9 percent of employees had a current appraisal, but better than the 97.9 percent in FY12. In FY14, 98.6 percent of employees had a current performance plan. The number of current performance plans is up slightly from FY13 at 98.2 percent, and 98.4 percent in FY12.

Employee Retention: The Employee Injury and Illness Lost Time Incidence Rate is a measurement used by OSHA and the Bureau of Labor Statistics to show the number of job-related injuries and illnesses that result in one or more lost workdays by employees. For FY14, the Lost Time Incidence Rate was 2.2 (there were 34 lost time injuries recorded during the year) which was similar to the FY13 rate of 2.1. The employee turnover rate is based on a standard industry calculation that factors in hires/rehires, terminations, retirements with pay, transfers in and transfers out, but does not include temporary, limited term, and temporary construction employees. We report performance on this measurement, but do not set targets. The FY14 turnover rate of 8.9 percent represents a decrease compared to the FY13 turnover rate of 10.1 percent. In the past five years the rate has fluctuated between 6.1 percent and 10.1 percent. As part of the development of the July 2014 Strategic Plan, the following new KPI was adopted in lieu of reporting on the turnover rate: “Annually implement outreach campaigns on four wellness themes”.

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KEY PERFORMANCE INDICATOR – SUMMARY

FY10

FY11

FY12

FY13

FY14

Long Term Water Supply 32MGD of Supplemental Dry Year Supply by 2040 ++ ++ ++ ++ ++ Sufficient supplies to hold rationing to a maximum of 15% during next 3 yrs. # ++ ++ ++ ++ 39 MGD Savings from Conservation Programs & Natural Replacement by 2040 ++ ++ ++ ++ ++ 11 MGD of Recycled Water Capacity by 2040 ++ ++ ++ + + Update the Climate Change Monitoring and Response Plan ++ ++ + + +

Water Quality and Environmental Protection

Mokelumne River Fall-Run Chinook Salmon Escapement ,long term average ++ ++ ++ ++ ++ % of JSA Mokelumne River Minimum Flow Releases Met ++ ++ ++ ++ ++ % of Water Quality Goals Met + + + + + % of Water Quality Regulations Met ++ ++ ++ ++ ++ Number of NPDES and Waste Discharge Permit Notices of Violation Received -- -- ++ ++ +

10% Net Reduction in GHG Emissions from Facilities over 2000 Baseline by 2015 ++ ++ ++ ++ ++ Implement source ID/Control to reduce PCBs in MWWTP influent # + + ++ #

Long Term Infrastructure Investment

Number of Master Plans Completed or Updated + + + -- ++ Unplanned Water Service Interruptions per 1,000 Active Accounts

o <4 hours o 4-12 hours o >12 hours

++ ++ ++

++ ++ ++

++ ++ ++

++ ++ ++

++ ++ ++

Number of Water System Pipeline Breaks per 100 Miles of Pipe ++ ++ -- ++ -- Availability of Wastewater Assets ++ ++ ++ ++ ++ Miles of pipe replaced + ++ ++ ++ ++

Design errors and omission change orders on construction contracts ++ ++ ++ ++ ++ Award construction contracts to rehabilitate steel tanks ++ ++ ++ ++ ++ Complete a condition assessment of the wastewater interceptor system before 2016 ++ ++ ++ ++ #

Long Term Financial Stability Water Rates at or Below the Median of other Bay Area Agencies

Wastewater Rates at or Below the Median of other Bay Area Agencies ++ --

++ --

++ --

++ --

++ --

% of Capital Program Funded from Debt ++ + -- + ++ Debt Coverage ++ + ++ ++ ++ Actual Reserves as % of Target ++ ++ ++ ++ ++ % of Planned Audits Completed + + + -- -- % of Audit Findings Resolved within 90 Days ++ ++ ++ # ++ Water Operating Expenditures as a Percentage of Operating Budget Wastewater Operating Expenditures as a Percentage of Operating Budget

++ ++

++ ++

++ ++

++ ++

++ ++

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KEY PERFORMANCE INDICATOR – SUMMARY

FY10

FY11

FY12

FY13

FY14

Water Capital Expenditures as a Percentage of Budgeted Cash Flow Wastewater Capital Expenditures as a Percentage of Budgeted Cash Flow

-- --

+ --

++ --

+ +

+ +

Customer Service

% of Customers Rating District’s Overall Job as “Good” or “Excellent” -- # # # -- % of Customers Rating District’s Telephone Response as “Good” or “Excellent” ++ + ++ ++ ++ % of Customers Rating District’s Field Response as “Good” or Excellent” ++ ++ ++ ++ ++ % of Time Automated Systems Available for Customer Access ++ + + ++ + Update the District’s EOP and Conduct Exercises Annually ++ ++ ++ ++ ++ Update 100% of District Business Continuity Plans and Test One Time per Year -- -- -- ++ ++ Workforce Planning and Development

% of Exams Resulting in Hiring Lists within 60 Days + ++ -- ++ ++ % of District Hires with AA Opportunities % of Competing Leadership Program Graduates Who Place on Applicable Lists + -- ++ ++ -- Annual Average Training Hours per Employee ++ ++ ++ ++ + % of Performance Plans Completed on Time + + + + + % of Performance Appraisals Completed on Time + + + + + Employee Injury & Illness Incidence Rate ++ ++ ++ ++ ++ Employee Turnover Rate


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New East Bay Municipal Utility District :: Home - project · 2015. 5. 15. · EAST BAY MUNICIPAL...

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