SAWS 2006 Financial Results Reflect Operating and Financial Strength
Source: San Antonio Water System
SAWS financial results showed a strong net income of $55.6 million and $181.9 million added to equity. Operating revenues were $361.2 million compared to $328.2 million in 2005.
“Above-average revenues were certainly a part of the success story,” said President/CEO David Chardavoyne. “But improved management practices, and the efforts of the 1,600 or so men and women who enable SAWS to run on a daily basis were key to these impressive results.”
“The continuation of the financial and operational efficiency program that started two years ago,” continued Chardavoyne, “ensured that we were able to make the most of the available income for a strong finish to 2006. Fitch Ratings recognized the improvements by improving our bond outlook from Stable to Positive.”
SAWS ratepayers faced no rate increase in 2007, an astounding improvement from a projection two years earlier of a 17.6 percent increase. The same projections showed a rate increase of over 8 percent for 2008, but SAWS officials continue to analyze whether such a high increase will be needed next year.
“We’re fairly confident we won’t need an increase as high as 8 percent next year, but we’ll know more after our 2008 budget process is completed later in the summer,” said SAWS CFO Doug Evanson.
Controlling debt has also been an instrumental tool over the last two years in controlling rates. By reinvesting higher-than-expected revenues, SAWS was able to finance major projects with cash, resulting in a reduced reliance on debt.
While the utility’s financial strength helps maintain affordable rates for customers, it also facilitates the opportunity to pre-fund a portion of its retiree healthcare liability – a costly financial standard that will soon be required from all Government agencies. “Our successful financial results over the past two years will be critical in managing the looming financial burden of GASB 45,” added Evanson.
GASB 45 is an accounting statement from the Government Accounting Standards Board that will impose a new mandate on Government agencies nation-wide to account for unfunded post retirement medical benefits beginning in 2007.
“Our strong cash position will help us get a good start on funding this liability, which preliminary estimates indicate could exceed $300 million,” confirmed Evanson.
Operating income increased 26.9 percent over last year’s results to a record amount of $110.1 million and capital contributions were $126.3 million, a 55.2 percent increase from last year.
From an operational standpoint, the utility successfully managed the challenges of responding to an 82 percent increase in main breaks during the 2006 drought season, as well as meeting the demands of customer growth in excess of more than 3 percent – while maintaining flat staff levels.
Since 1988, SAWS has served an increase of over 30 percent in customers, while pumping amounts from the Edwards Aquifer have gone unchanged. Strong conservation programs have been key to this trend. SAWS Conservation Program was recently recognized by The Ash Institute for Democratic Governance and Innovation at Harvard University’s John F. Kennedy School of Government as one of the Top 50 Programs in the 2007 Innovations in American Government Awards competition – the only Texas finalist in the competition.