Our Fiscal Year 2017 was one marked by drought recovery. As a public agency, we do not earn a profit. Rather, we strive to collect revenues to cover the cost of service and ensure that our customers continue to receive high-quality water at the lowest possible cost. In this regard, our financial outlook remains strong as we continue to optimize our assets and seek outside funding sources.
Every year, we review our 10-year financial plan and consider how best to manage increasing costs. This process allows us to maintain and upgrade facilities in a proactive manner and avoid major financial surprises. While our water sales remained below historical levels, our expenditures also came in below budget. This past year, our credit ratings were reaffirmed enabling us to take advantage of low interest rates and refinance debt. Along with scheduled debt payments, principal obligations over the next 10 years were reduced by about $10 million without extending the payment terms.
This past year, thanks to the low cost of surplus Delta water flows, we were able to fill Los Vaqueros Reservoir to levels planned for this year and next year at $500,000 below budget. Additionally, we sold surplus property near our Randall-Bold Water Treatment Plant, in Oakley, for $2.85 million and were able to reduce our pension and retiree health liabilities. The cost savings efforts from this year will provide a source of funding to repair damages caused by last year’s record-setting winter storms.
The drought and recent court decisions drove work this year to conduct a comprehensive rate structure review to ensure our charges are in alignment with the cost to provide services. Total revenues will not increase as a result of a change in rate structure, although charges may shift between individual customer classes to ensure the appropriate allocation of costs.
The policy objectives of this study include:
Ensuring financial sufficiency and stability
Providing affordable water for essential uses
Allocating costs equitably
Encouraging efficient water use
Enhancing customer understanding of the rate structure