Cedar Falls Utilities 2020 Annual Budget · Cash Flow 37 ‐ 39 ... approximately 3.5% and union contract wages have been set at 3% in 2020. ... Sec. 384.18 of Iowa Code provides

Cedar Falls Utilities 2020 Annual Budget

Operating Budget

and

Capital Improvement Plan

Electric, Gas, Water and Communications Utilities

CEDAR FALLS UTILITIES 2020 Annual Operating Budget and Capital Improvement Plan

BOARD OF TRUSTEES MEMBERS

Richard L. McAlister, Chair Jeffrey J. Engel, Vice Chair

MaraBeth Soneson, Secretary Debra Iehl

Craig A. Johnson John C. Larsen, Board of Trustees Counsel

***************

GENERAL MANAGER AND BUSINESS UNIT DIRECTORS

General Manager/CEO Steven E. Bernard

Director of Operations/COO William E. Skubal, Jr.

Director of Customer Service and Business Development/CRO

Michael C. Litterer

Director of Employee and Legal Services/General Counsel Susan M. Abernathy

Director of Finance and Organizational Services/CFO Wynette J. Froehner

Director of Communications Services/CTO Robert D. Houlihan


Table of Contents Vision, Mission, and Core Value Statements 1 Overview of the Budget Process 2 ‐ 4 Strategic Plan Summary 5 ‐ 9 Financial Summary Rates 10 ‐ 11 Ratios 11 ‐ 13 Operating Revenue 13 ‐ 15 Operating Expenses 16 ‐ 17 Personnel 18 Debt Service 19 Cash Balances and Reserves 20 ‐ 21 Budget Summary by Utility 23 Operating Expense Budget by Category 24 State Utility Budget Certification 25 – 26 Electric Utility Overview 30 ‐ 35 Revenue and Expense Summary 36 Cash Flow 37 ‐ 39 Gas Utility Overview 42 ‐ 44 Revenue and Expense Summary 45 Cash Flow 47 ‐ 49 Water Utility Overview 52 ‐ 53 Revenue and Expense Summary 54 Cash Flow 55 ‐ 57 Communication Utility Overview 60 ‐ 62 Revenue and Expense Summary 63 Cash Flow 65 ‐ 67 Personnel Summary 70 ‐ 77 Capital Improvement Plan (CIP) 80 ‐ 99

awagner

Typewritten Text

Note: Blank pages included in the print version have been removed from this file.


Vision, Mission, and Core Value Statements

CFU MISSION STATEMENT To provide our customers with innovative, high‐quality utility services that bring the best value to the

community.

CFU VISION STATEMENT Cedar Falls Utilities strives to achieve a standard of excellence as an industry leader and a trusted

provider of utility services to its customers and community.

CFU CORE VALUES

Customer Focus CFU employees value knowing and serving the expectations of their community. Decisions are based on exceeding the customer’s expectations with a continuous focus on maintaining our infrastructure and positioning ourselves to quickly respond to all customer needs. Ethical and Responsible Behavior CFU employees will act at all times with professionalism, integrity, trust, honesty and respect for our customers and co‐workers. CFU’s employees and Trustees have been entrusted with the responsibility of providing for our community’s electric, natural gas, water and communications needs. We will be good stewards of the financial resources entrusted to us by our community, CFU’s physical assets and the environment. Innovation Anticipation of new ideas and technology allow us to be innovative and timely in adapting to a rapidly evolving industry. Employee Teamwork and Personal Growth CFU values the cooperative sharing of resources in a supportive environment in order to utilize each individual’s unique talents to create a unified approach to carry out our mission. CFU values employee diversity, employee experience and employee safety; provides opportunities to develop and grow; and cultivates a sense of individual and organizational pride.

1


Overview of the Budget Process

Budget Document This document is the Cedar Falls Utilities (CFU) 2020 Annual Operating Budget and Capital Improvement Plan for the Municipal Electric, Gas, Water, and Communications Utilities, of the City of Cedar Falls, Iowa. The Operating Budget and Capital Improvement Plan are considered one Annual Budget. CFU management believes these budgets reflect the most accurate data available at this time, and the documents have been prepared in a manner consistent with generally accepted accounting principles and methods. This budget will serve as a financial tool to maintain efficient management of CFU’s resources, while continuing to provide the level of service customers have come to expect. Development of the Annual Budget CFU is a combination municipal utility comprised of separate Electric, Gas, Water, and Communications Utilities dedicated to meeting the needs of the citizens of Cedar Falls, Iowa. Each utility is a separate legal entity, and budgets are developed for each utility on an individual basis. This includes projected operating revenue and expenses plus capital expenditures. The Strategic Plan, approved by the Board of Trustees April 10, 2019, was incorporated in the budget decisions of the Business Unit Directors and Department Managers while preparing the 2020 budget. With the community’s continued growth, environmental legislation, and competition in the communications field, long‐range planning is imperative for CFU. In July 2019, Business Unit Directors, Department Managers and Supervisors received instructions for preparation of the 2020 budget documents and a schedule for completion of various steps in the process. Each business unit and their respective departments involved in the preparation of these budgets were as follows:

Business Unit Departments

Administration Administration

Communication Services Communication Operations, Meter Reading, Information Systems

Customer Service and Business Development Customer Service, Energy Service, Sales & Business Development, Marketing

Electric, Gas and Water Operations Electric Production, Electric Distribution, Electric Operations, Gas & Water Operations, Gas & Water Construction, Transportation Services

Employee and Legal Services

Employee & Legal Services

Finance and Organizational Services Finance, Inventory Purchasing & Warehousing, General Purchasing & Facilities

2



It was each department managers’ responsibility to complete an operating budget workbook, and return it to Finance before mid‐August 2019. These workbooks include the re‐forecasting of 2019 and the completion of the 2020 budget. To streamline the process, expenses were not estimated by account but rather on a function‐level basis. Joint costs of the business units are allocated to the four utilities via overhead allocation percentages, which are calculated based on revenues, payroll, total plant, and number of meters. These allocations are prepared and updated on an annual basis. All operating expenses are either budgeted directly to a utility category or allocated to the major account categories based on the average ten year historical actual expenses. Part of the Operating Budget preparation includes a personnel request process and estimation of 2020 wages. Wage increases and step adjustments, based on performance, average approximately 3.5% and union contract wages have been set at 3% in 2020. Finance works with the department managers and revenue teams, to calculate the projected revenues and compile the information into one document for each utility, called the cash flow. Finance also reviews the budgets for compliance with budget directives and revenue requirements for each utility. System requirements were based on normalized weather conditions, and revenue forecasts are based on rates anticipated to be in effect during year 2020. The Capital Improvement Plan is compiled on a parallel timetable with the Operating Budget and prepared by department managers, planners, and engineers into divisional categories of expenditure, such as transmission, distribution, or general plant. Finance compiles the separate categories into one CIP budget summary. Budget Review Prior to being presented to the Board of Trustees, the General Manager and the Director of Finance and Organizational Services review the proposed budget documents with the budget preparers and other Directors. Department managers complete requested revisions based on these reviews. The four utilities are enterprise funds and rates in each utility are set at levels that allow for future capital expansion. If revenues exceed expenses there is an increase in the fund balances that will be used for future capital expenditures. If revenues are less than expenses, enterprise fund balances are used to balance the budget. It is the Board of Trustee’s responsibility to set rates that will produce adequate revenues for capital additions, expected operating expenses, including debt service requirements and other designated reserves.

3



Budget Adoption State code gives the Board of Trustees the authority to adopt the Annual Budget and amendments. The Board of Trustees sets the date for the public hearing on the Annual Budget during the October board meeting. After the Board of Trustees sets the date for the public hearing, a sufficient number of copies of the detailed budget are made available to city offices, and the budget is published in the local newspaper 10 to 20 days prior to the public hearing. This allows the public time to ask questions about the budget, and to attend the public hearing held in November. Final approval of the Budget rests with the Board of Trustees in November. Once approved, the Annual Budget becomes the basis for operating and capital expenditures during the ensuing year. Total expenditures may not exceed the adopted budget as presented to the Board of Trustees. Budgetary control is provided by monthly revenue and expense reports and budget vs. actual variance reports completed by the managers, compiled by the Finance department and provided to the General Manager and Directors. The General Manager provides monthly financial reports to the Board of Trustees. Budget Amendments Sec. 384.18 of Iowa Code provides that a municipal budget may be amended for any of the following purposes:

1. To permit the appropriation and expenditure of unexpended unencumbered cash balances on hand at the end of the preceding year, which had not been anticipated in the budget.

2. To permit the appropriation and expenditure of amounts anticipated being available from sources other than property taxation and which had not been anticipated in the budget.

3. To permit transfers from the debt service fund, the capital improvements reserve fund, the emergency fund, or other funds established by state law, to any other city fund unless specifically prohibited by state law.

4. To permit transfers between programs within the general fund. A municipal utility’s budget becomes effective January 1 of each year unless amended under the conditions listed above. A budget amendment must be prepared and adopted in the same manner as the original budget described above. A municipal utility’s budget must be amended by November 30 of the current year to allow for a protest hearing to be held and a decision rendered before December 31.

4


Strategic Plan Summary

The Strategic Plan serves as a platform for CFU’s Board of Trustees, management and employees from which to make the many business decisions that must be made in the course of day‐to‐day operations of the Municipal Electric, Gas, Water and Communications Utilities and for the planning of future growth and development. The identified goals and objectives guide the Trustees and employees in achieving the vision and mission of CFU and provide the basis for the budgeting process. The Strategic Plan is made up of eight sections: Customer Satisfaction, Fiscal Responsibility, Employee Enthusiasm, Electric Utility, Gas Utility, Water Utility, Communications Utility and Corporate Support Services.

SUMMARIZED BELOW ARE THE GOALS AND OBJECTIVES OUTLINED IN THE 2019‐2028 STRATEGIC PLAN ADOPTED BY THE BOARD ON APRIL 10, 2019:

KEY RESULT AREA: CUSTOMER SATISFACTION GOAL #1: PURSUE LOAD AND REVENUE GROWTH THAT BENEFITS CFU, OUR CUSTOMERS AND THE COMMUNITY. Objective #1: Support economic development and the expansion of existing and new businesses in Cedar

Falls.

Objective #2: Continue to dominate the market share for Internet and pay TV customers, maintain above 90% of the market for residential customers.

Objective #3: Increase the number of phone customers for both Residential and Business.

Objective #4: Promote the expansion of our Communications Utility market.

GOAL #2: PROVIDE EXCEPTIONAL CUSTOMER SERVICE, RECEIVING OVERALL QUALITY OF SERVICE RATINGS ABOVE 9 IN THE VOICE OF THE CUSTOMER SURVEY. Objective #1: Improve service provided to prospective customers and to customers after they are

connected.

Objective #2: Enhance services to Key Accounts, commercial and industrial customers.

GOAL #3: IMPLEMENT NEW PRODUCTS AND SERVICES THAT BRING VALUE TO OUR CUSTOMERS AND THE COMMUNITY Objective #1: Engage in product research that encompasses not only local communication or energy

providers, but also other leading U.S. or international providers.

GOAL #4: PRACTICE GOOD ENERGY AND ENVIRONMENTAL STEWARDSHIP THAT ENCOURAGES PARTICIPATION BY OUR

CUSTOMERS

Objective #1: Continue to support customer‐owned or funded renewable energy.

Objective #2: Continue to be a leader in energy efficiency, sustainability and environmental responsibility.

Objective #3: Remain a trusted source of energy‐related technical information for our customers, particularly as it relates to energy efficiency and environmental benefits.

GOAL #5: EFFECTIVELY COMMUNICATE CEDAR FALLS UTILITIES’ VALUE TO THE COMMUNITY AND INITIATE PROPER

MESSAGING AND PROMOTIONAL ACTIVITIES IN SUPPORT OF CFU’S PRODUCTS AND SERVICES Objective #1: Reinforce community perception of CFU as a valued, reliable and trustworthy provider of

services and initiate promotional activities to encourage customer acceptance and safe use of our products and services.

5



KEY RESULT AREA: FISCAL RESPONSIBILITY GOAL #1: BE FISCALLY RESPONSIBLE AND PLAN FOR FUTURE FISCAL STRENGTH Objective #1: Annually establish 5 and 10 year plans to control costs and be fiscally responsible. Objective #2: Maintain strong credit ratings to enhance ability to obtain additional capital. Objective #3: Annually, review capacity and large capital replacement needs due to retiring key units of

property to recommend savings necessary to minimize the impact of future borrowings. Objective #4: In the annual budgeting process, review and propose transfer payments to the City of Cedar

Falls (PILOT), which are fiscally responsible and maintain our role within the community as a good corporate citizen.

GOAL #2: MAINTAIN COMPETITIVE RATES Objective #1: Annually, strive to achieve and maintain rates in the lowest 10% of peer communities in

Iowa for both residential and commercial rate report cards.

GOAL #3: EVALUATE, IMPLEMENT, AND EDUCATE FOR PROCESS IMPROVEMENTS AND GOVERNMENTAL ACCOUNTING

STANDARDS OF ENTERPRISE SOFTWARE SOLUTIONS Objective #1: Improve the flow of information in accounting, purchasing, human resources, and

warehousing processes.

KEY RESULT AREA: EMPLOYEE ENTHUSIASM GOAL #1: DEVELOP AND MAINTAIN A POSITIVE, DYNAMIC, EFFICIENT, SKILLED AND PROGRESSIVE WORKFORCE Objective #1: Use best practices to recruit and retain a diverse workforce to meet the existing and future

challenges of delivering essential utility services to Cedar Falls.

Objective #2: Provide a positive working environment that fuels job productivity, communication and personal satisfaction for all employees and that fosters positive, collaborative relations between labor and management and between departments.

Objective #3: Provide opportunity and support for employees’ personal growth and development by implementing a formalized training program and developing a workforce plan to prepare for the next 3‐5 years.

Objective #4: Maintain a fair and competitive compensation and benefits program for all employee groups to support the company’s mission, vision and core values.

GOAL #2: PROMOTE A CULTURE OF HEALTHY, ETHICAL AND SAFE EMPLOYEES DEDICATED TO LIVING THE CFU VISION AND

MISSION IN SERVICE TO OUR CUSTOMERS

Objective #1: Maintain a safe working environment for all employees.

Objective #2: Maintain, support and enhance the wellness culture for all employees in order to facilitate a healthy and productive workforce.

GOAL #3: PROVIDE A WORKFORCE STRATEGY TO BE ABLE TO EFFECTIVELY RESPOND TO AND ADDRESS PERSONNEL AND STAFFING NEEDS OF THE DEPARTMENTS IN THE NEXT FIVE YEARS Objective #1: Focus on raising career awareness in the utility industry for our future workforce.

Objective #2: Develop a comprehensive database of critical positions in order to assess succession needs and business continuity readiness.

Objective #3: Develop a Workforce Continuity Program.

6



KEY RESULT AREA: ELECTRIC UTILITY GOAL #1: MAINTAIN FINANCIAL HEALTH OF THE ELECTRIC UTILITY

Objective #1: Make business decisions that ensure competitive rates that are in the lowest 10% as compared with 20 peer communities for the Electric Utility.

GOAL #2: IMPROVE INTERNAL SYSTEM RELIABILITY

Objective #1: Assess and publish customer reliability statistics.

Objective #2: Improve the reliability of the internal transmission and distribution system.

Objective #3: Analyze the Red Team report to address attacks of terrorism or vandalism. Identify economically feasible mitigation improvements.

GOAL #3: IDENTIFY AND REVIEW COST‐COMPETITIVE ENERGY SUPPLY OPTIONS

Objective #1: Identify and evaluate energy supply options.

Objective #2: Evaluate opportunities to cooperate with regional utilities toward expansion or creation of joint action ventures with respect to generation, dispatch and power supply opportunities.

GOAL #4: DEVELOP AND IMPLEMENT GENERATION, TRANSMISSION AND DISTRIBUTION CAPACITY IMPROVEMENTS TO

MEET FUTURE LOAD DEMAND Objective #1: Maintain a long‐range generation capacity plan. Strive to increase diversity, address

environmental concerns and maximize value to CFU ratepayers. Annually review and update our generation capacity projections and 20‐year load forecast

Objective #2: Maintain a long‐range electric infrastructure improvement plan.

KEY RESULT AREA: GAS UTILITY GOAL #1: PROVIDE SAFE, RELIABLE SUPPLY AND DELIVERY OF NATURAL GAS TO OUR CUSTOMERS Objective #1: Provide timely planning, design, construction, operation and maintenance for reliable gas

system delivery, expansion, and improvement. Annually review and update 10‐year Capital Improvement Plan (CIP).

Objective #2: Provide a well‐qualified workforce and succession planning to achieve the Gas Utility’s Strategic Plan, provide high quality customer service.

GOAL #2: PROVIDE HIGH‐QUALITY FIELD AND INFORMATIONAL SERVICES THAT PROMOTE THE SAFE USE OF NATURAL GAS BY

OUR CUSTOMERS Objective #1: Increase public awareness and education regarding natural gas including its safety,

characteristics, and uses and system reliability.

Objective #2: Utilize new technologies where it may benefit CFU customers.

GOAL #3: MAINTAIN FINANCIAL HEALTH OF THE GAS UTILITY

Objective #1: Make business decisions that keep the Gas Utility within budget and that will ensure competitive rates that are in the lowest 10% as compared with 20 peer communities.

Objective #2: Manage gas commodity purchasing to minimize cost and risk.

Objective #3: Minimize gas transportation and distribution costs, while retaining operational benefits of our pipeline contract.

7



KEY RESULT AREA: WATER UTILITY GOAL #1: PROVIDE HIGH‐QUALITY DRINKING WATER THAT MEETS OR EXCEEDS INDUSTRY STANDARDS AND REGULATORY

REQUIREMENTS

Objective #1: Provide high‐quality drinking water with safe and reliable delivery.

Objective #2: Provide a well‐qualified workforce and succession planning to achieve the Water Utility’s Strategic Plan and provide high‐quality customer service.

GOAL #2: DEVELOP AND IMPLEMENT INFRASTRUCTURE IMPROVEMENTS AND O & M PLANS TO MEET CURRENT AND FUTURE

DEMAND Objective #1: Provide timely planning, design, construction, operation and maintenance for water system

operation, expansion, and improvement. Annually review and update 10‐year Capital Improvement Plan (CIP).

Objective #2: Monitor and evaluate new technologies, materials and construction methods. Implement where beneficial to CFU.

GOAL #3: MAINTAIN FINANCIAL HEALTH OF THE WATER UTILITY AND BENEFIT CUSTOMER

Objective #1: Make business decisions that keep the Water Utility within budget and that will ensure competitive rates that are in the lowest 10% as compared with 20 peer communities.

Objective #2: Explore methods and payment alternatives for customers facing major water system expansion or water service repair costs.

KEY RESULT AREA: COMMUNICATIONS UTILITY GOAL #1: EVALUATE AND IMPLEMENT INNOVATIVE, HIGH‐QUALITY TELECOMMUNICATIONS TECHNOLOGY TO REMAIN

COMPETITIVE AND EFFICIENT Objective #1: Evaluate the technology roadmap for video services.

Objective #2: Evaluate the technology roadmap for data services.

Objective #3: Evaluate the technology roadmap for phone services.

GOAL #2: PROVIDE RELIABLE DELIVERY OF SERVICES TO OUR INTERNAL AND EXTERNAL CUSTOMERS

Objective #1: Ensure the redundancy and resiliency within our systems are adequate. Objective #2: Establish metrics for communications network service quality.

GOAL #3: FIND WAYS FOR THE COMMUNICATIONS UTILITY TO GROW WITHIN THE OPERATING CONSTRAINTS OF A MUNICIPAL

ENTERPRISE Objective #1: Introduce new communications products and product enhancements that will benefit

customers and be financially self‐supporting.

8



KEY RESULT AREA: CORPORATE SUPPORT SERVICES GOAL #1: MONITOR AND ADDRESS CYBER AND PHYSICAL SECURITY RISKS Objective #1: Assure adequate insurance in the risk management plan to protect for various

eventualities.

Objective #2: Using a committee approach, identify improvements that will allow CFU culture to embrace security awareness.

Objective #3: Review and complete changes to key systems and physical security that are needed to continue to maintain operations and data in a secure and responsible manner.

GOAL #2: CONSTRUCT AND MAINTAIN HIGH QUALITY FACILITIES AND GROUNDS TO PROVIDE A PRODUCTIVE, SAFE AND SECURE ENVIRONMENT AND POSITIVE IMAGE FOR OUR EMPLOYEES, CUSTOMERS AND COMMUNITY Objective #1: Plan, construct, and update facilities in a fiscally responsible manner to provide adequate

space and environmental controls for employees to perform job duties safely, efficiently and productively.

Objective #2: Develop routine maintenance plan and procedures to maintain appearance and functionality of facilities and landscaping.

Objective #3: Provide physical security controls to protect customers, employees and company assets.

GOAL #3: EVALUATE OPPORTUNITIES FOR BUSINESS PROCESS IMPROVEMENTS Objective #1: Identify improvements in business processes to obtain efficiencies and promote customer

service.

Objective #2: Improve customer information and billing processes.

Objective #3: Continue to test and verify our disaster recovery and business continuity plan.

GOAL #4: PROVIDE EXCELLENT LEGAL SERVICES TO THE BOARD OF TRUSTEES AND GENERAL MANAGER IN ORDER TO

SUPPORT THE MISSION, VISION AND CORE VALUES Objective #1: Provide timely and thorough review of all contract documents.

Objective #2: Provide information to the Board and Executive Management regarding state and federal legislative matters and relationships in order to advance issues of importance to the Utilities.

Objective #3: Review Board’s Bylaws and governance policies to ensure legal compliance and consistency.

Objective #4: Consider and evaluate level of transparency to the public with respect to Board meetings and actions.

9


Financial Summary

Rates In the 2020 budget, management remained mindful of the goal of having CFU’s rates in the lowest 10% when compared to other utility service providers. Given CFU’s need for substantial long‐term investments, along with the directive to keep rates very competitive while experiencing a growing local economy, management has a formidable task in balancing these goals. According to the most recent residential rate survey, CFU’s overall residential rates for all four utilities combined will continue to be the lowest when compared to twenty peer communities. For the period June 2018 to May 2019 the average residential customer spent $1,027 for electric service; $565 for gas service; $1,530 for basic plus cable and internet service; and $234 for water service for a total annual bill of $3,356. The average annual bill for the twenty peer communities is $4,288. A 2% increase to base electric rates is recommended to allow continued funding for a Board Designated Generation and Transmission Acquisition fund. This increase and reserve funding provides another step in a gradual increase in cash reserves, while slowly decreasing the balance of excess reserves above Legal and Board Designation requirements. According to the most recent survey, the Electric Utility obtained a 1st place ranking when compared with the current residential rates of twenty peer communities. Based on the projected ten‐year plan we believe this utility will be able to sustain a competitive rating. The largest cost to the Gas Utility is the cost of natural gas, which in the 2019 reforecast represents approximately 60.8% of the total cost of operations for the Gas Utility. In the 2020 budget the cost of natural gas represents 56.8% of the total cost of operations. Staff continues to explore ways to control natural gas costs. CFU’s rates also include some services, such as furnace checks, that are either not offered or are charged separately by our peers. Conservatively, the value of these additional services is estimated to be $383,000 per year. The most recent survey shows the Gas Utility is in first place when compared with the current residential rates of twenty peer communities. A 2% increase to base gas rates is recommended, for 2020 and included in budgeted revenues. The Water Utility has large capital expenditures anticipated for the next ten years. These expenditures will allow CFU to replace water mains at the same time the City of Cedar Falls is doing street repairs or reconstruction. This provides a substantially less expensive alternative to the Water Utility to replace water mains. While we do receive reimbursement for these new water mains in the tax increment financing (TIF) districts, this accounts for less than 1% of the anticipated construction projects in our ten year plan. A 7% increase to base water rates is recommended and future rate increases are anticipated over the next several years. These increases will help achieve more desirable cash reserves levels for this utility and address concerns with net operating income and projected capital demands. The Water Utility has a third place ranking when compared with the current residential rates of twenty peer communities in the most recent survey.

10


Financial Summary

Staff performs an annual analysis of the Communications Utility’s cost of service and evaluates current offerings to strategize improvements to the product, generate new revenues and/or reduce expenses. This is done with the customer in mind and the impact on the Utility overall. The Communications Utility maintains a first place ranking when compared with the current residential rates of twenty peer communities in the most recent rate survey. Programming costs are approximately 74% of cable television’s retail revenues. Since 2009, CFU has experienced programming cost increases that average around 10% annually, and this is the main driver for the rate changes proposed for TV rates. To keep pace with programming costs, we are recommending a $7 per month increase in Basic and Basic Plus. The increase in Basic and Basic Plus programming in 2019 was $5.28 and the anticipated increase in 2020 is estimated at $5.35. Since 2009 programming cost for our Basic Plus package has risen $43.47, while the rate has risen $45. We have raised rates strictly to cover programming cost increases. We continue to see gradual declines in TV subscribers, but our pricing strategies greatly minimize the impact of TV subscriber losses. CFU continues to look for ways to control programming cost increases during contract negotiations. The 2020 budget includes rate increases to FiberNet TV services as follows:

Service Description

Current Rates Per Month

New Rates Per Month Change

Basic (Last increase January 2019)

$35.00 $38.00 $3.00

Basic Plus (Last increase January 2019)

$52.00 $56.00 $4.00

No rate increases are being recommended for FiberNet Data, WaveNet Wireless or Phone services in 2020. Ratios CFU monitors several key standard financial indicators used by rating agencies as measures of its financial health. Except for the debt service coverage ratios, which reflect bond covenant requirements of 1.25 plus a 50 basis point safety margin, the goals are financial targets for each utility in order to maintain a strong financial position. These measures relate to debt service coverage, cash as a percent of operating expenses, and net operating income/net income as a percent of revenue and Board designated cash reserves. Details are shown in the cash flow statement for each utility in its individual section of the budget document and a summary of the goals and ratios are shown in the following table.

11


Financial Summary

These indicators are used to understand the view of the financial health of each utility, which is particularly important if future borrowing is anticipated and are used to prompt discussion with potential lenders and rating agencies. Some of these standard indicators must be evaluated with care as variation from the standard may be acceptable. For example, in the Electric and Gas Utilities should the cash as a percent of operating expenses fall below the desired goal, due to high fuel or natural gas costs, it can be explained to the lenders and rating agencies that the Electric and Gas Utilities’ operating expense is made up of energy, fuel and purchase power costs and there is an energy cost/purchased gas adjustment mechanism to deal with the recovery of these costs without raising rates. The Electric Utility’s key financial ratios all meet or exceed recommended goals. The Electric Utility’s cash surplus of Board recommended reserves of $11.1 million will be used to fund ongoing overhead to underground conversions, overhead and underground extensions and upgrades, the ongoing replacement and installation of new street lights, power generation upgrades and CFU facilities building and improvements. More detail can be found in the Electric Utility and Capital Improvement Plan (CIP) sections of this book. The Gas Utility’s net operating income as a percent of revenue of 2.38% and net income as percent of revenue of 3.86% are lower than the stated goal of 6% primarily due to management’s prior plan to drawdown the Board surplus, which has occurred since 2011. The Gas Utility’s cash surplus of Board recommended reserves of $3.9 million will be used to fund the cost of relocation, abandonment, and replacement of gas mains, gas mains extensions and CFU facilities building and improvements. Gas main replacement and relocation is discussed in more detail in the Gas Utility and Capital Improvement Plan (CIP) sections of this book.

Measure Goal Electric Gas Water Communications

Debt Service Coverage‐Revenue Debt 1.75+ 3.93 N/A N/A N/A

Debt Service Coverage‐All Debt 1.75+ 3.93 N/A N/A N/A

Cash as a % of Operating Expenses(without Depreciation, PILOT, & NPL/OPEB

Pension Expenses)

50%+ 71.60% 64.28% 90.77% 83.06%

Net Operating Income as a % of

Revenue (NOI)6%+ 6.25% 2.38% 9.46% 15.19%

Net Income as a % of Revenue 6%+ 8.02% 3.86% 15.31% 16.30%

Cash Surplus (Deficit) after Legal &

Board Recommended ReservesZero $11,073,367 $3,875,393 $451,901 $5,951,945

2020 Key Financial Ratios

12


Financial Summary

The Water Utility’s key financial ratios all meet or exceed recommended goals, which is a positive situation as this utility is facing larger than normal capital expenditures over the next several years. Water main replacement and relocation due to City and State road construction is the majority of the 2020 Capital Budget and is discussed in more detail in the Water Utility and Capital Improvement Plan (CIP) sections of this book. The Communications Utility’s key financial ratios all meet or exceed recommended goals. The Communications Utility’s net operating income as a percent of revenue of 15.19% and net income as percent of revenue of 16.30% remain stronger than the stated goal of 6% primarily due to the need to fund the continued replacement of Motorola ONTs and OLTs, headend data, and video equipment for continued quality service, fiber infrastructure for new developments, and overhead to underground conversions following the Electric Utility’s capital improvement plan. Operating Revenue Revenues for the Electric, Gas, and Water Utilities were budgeted based on normalized weather conditions.

13


Financial Summary

Electric Revenue

2019 2019 2020

Original Budget Reforecast Budget

54,169,640$ 54,729,634$ 559,994$ 1.03%

53,133,913$ 54,729,634$ 1,595,721$ 3.00%

Increase / (Decrease)

2020 budgeted operating revenues in the Electric Utility increased 1.03% from the original 2019 budget and increased 3% from the 2019 reforecast. Our forecast is based on expected Western Unit MISO sales and expected revenues collected through the Energy Cost Adjustment (ECA), utilizing normalized weather and projected MISO prices. There is an overall 2% rate increase recommended for 2020 in the Electric Utility and is included in these revenues.

Electric Retail Sales

2019 2019 2020


498,850,000 492,450,000 (6,400,000) ‐1.28%

493,452,753 492,450,000 (1,002,753) ‐0.20%


The retail kWh usage in 2020 is expected to be 0.20% lower than 2020. This change reflects expected normalized weather and other anticipated changes in CFU’s customer base.

Gas Revenue

2019 2019 2020


11,200,033$ 12,932,578$ 1,732,545$ 15.47%

13,844,473$ 12,932,578$ (911,895)$ ‐6.59%


2020 budgeted operating revenues in the Gas Utility increased by 15.47% from the original 2019 budget and decreased by 6.59% from the 2019 reforecast. The increase and decrease are the result of multiple factors.

‐ Anticipated higher sales (see Gas Retail Sales). ‐ Changes in the cost of Natural Gas (see Operating Expenses). Note: This cost is passed

on to customers through the purchased gas adjustment (PGA). ‐ A 2% increase in base rates for 2020.

14


Financial Summary

Gas Retail Sales

2019 2019 2020


2,007,677 2,713,923 706,246 35.18%

2,580,253 2,713,923 133,670 5.18%


Natural gas use for 2020 is projected to be 35.18% higher than 2019. The majority of the increase is due to anticipated sales to UNI’s Power Plant. In 2019 UNI’s Power Plant was updated and can now run on natural gas or coal. The remaining change reflects expected normalized weather and other anticipated changes in CFU’s customer base. At this time, 14% of average daily usage is in fixed price transactions for the 2019/2020 heating season (November‐March).

Water Revenue

2019 2019 2020


4,648,459$ 4,929,525$ 281,066$ 6.05%

4,593,985$ 4,929,525$ 335,540$ 7.30%


2020 budgeted operating revenues in the Water Utility increased by 6.05% from the original 2019 budget and increased by 7.30% from the reforecast 2019 budget. The increase is the primarily the result of a 7% base rate increase.

Communications Revenue

2019 2019 2020


21,564,554$ 22,079,730$ 515,176$ 2.39%

21,198,729$ 22,079,730$ 881,001$ 4.16%


In 2020, we are recommending rate adjustments in the Basic TV, Basic‐Plus TV, and Digital Premier TV packages, but no changes in data rates. The 2020 budgeted Communications Utility revenues are projected to increase 2.39% over the original 2019 budget primarily due to growth in data subscribers. The 2020 budgeted revenues are projected to increase 4.16% over the 2019 reforecast primarily due to rate adjustments in 2020 combined with expected data subscriber growth, offset somewhat by TV subscriber losses.

15


Financial Summary

Operating Expenses Expenses for the Electric, Gas, and Water Utilities are budgeted based on normalized weather conditions for anticipated temperatures and rainfall.

Electric Expenses

2019 2019 2020


51,862,654$ 51,311,112$ (551,542)$ ‐1.06%

49,792,837$ 51,311,112$ 1,518,275$ 3.05%


2020 operating expenses in the Electric Utility decreased 1.06% from the original 2019 budget. The change is not due to any one primary reason but changes throughout the operating expenses. Expected operating expenses in 2020 increased 3.05% from the 2019 reforecast. Again, the change is not due to any one primary reason but changes throughout the operating expenses.

16


Financial Summary

Gas Expenses

2019 2019 2020


10,956,844$ 12,625,183$ 1,668,339$ 15.23%

13,348,886$ 12,625,183$ (723,703)$ ‐5.42%


2020 operating expenses in the Gas Utility increased by 15.23% from the original 2019 budget and decreased 5.42% from the 2019 reforecast. This is primarily due to changes in natural gas costs. Those changes include:

‐ 2019’s Reforecast includes higher natural gas costs (cost per MCF) compared to the Original Budget.

‐ 2019’s reforecast includes higher natural gas costs due to increased sales (see Gas Retail Sales).

‐ 2020’s Budget includes lower anticipated natural gas costs (cost per MCF).

Water Expenses

2019 2019 2020


4,249,219$ 4,463,145$ 213,926$ 5.03%

4,195,940$ 4,463,145$ 267,205$ 6.37%


2020 operating expenses in the Water Utility increased by 5.03% from the original 2019 budget and increased by 6.37% from the 2019 reforecast budget due to overall higher operating costs.

Communications Expenses

2019 2019 2020


18,676,212$ 18,725,253$ 49,041$ 0.26%

17,960,147$ 18,725,253$ 765,106$ 4.26%


2020 operating expenses in the Communications Utility increased 0.26% from the original 2019 budget primarily from overall higher operating costs. Operating expenses in 2020 increased 4.26% from the 2019 reforecast primarily due to expected increases in programming expenses and overall higher operating costs.

17


Financial Summary

Personnel Excluding commodity costs, which require 46.9% of the operating budget, CFU’s largest expense is labor and benefit costs, which require 22.8% of the operating expense budget. Staffing levels are maintained in order to control costs, improve our competitive position, and provide for succession planning. Supplementing our regular workforce with outside contractors, consultants, students, and part‐time help during the busy construction season and for large projects will continue. This has been an economical way to help manage labor costs and also attract some high‐quality candidates for job‐training opportunities. The staffing budget and comparisons are as follows:

18


Financial Summary

Debt Service Currently the Electric Utility has one outstanding Revenue Bond, Series 2015, the debt is callable December 1, 2023. There are no plans to issue additional debt for the Electric Utility in the near future. The Gas, Water & the Communications Utilities have no debt outstanding and there are no plans to issue debt in the near future. Expected Outstanding Debt

Outstanding Debt as of Dec. 31, 2019

2020 Payments (Principal Only)

Outstanding Debt as of Dec. 31, 2020

Electric $17,145,000 $2,625,000 $14,520,000

Gas $0 $0 $0

Water $0 $0 $0

Communications $0 $0 $0

Total $17,145,000 $2,625,000 $14,520,000

Transfers to City – Payments in Lieu of Taxes (PILOT) CFU budgets for an annual transfer to the City of Cedar Falls as a payment in lieu of taxes (PILOT). In the 2020 Electric budget, CFU will accrue a $2,634,736 transfer to the City and budgeted $445,062 in property tax for a total of $3,079,798, which is 7.5% of the 2020 budgeted Electric retail revenues of $40,897,718. In the 2020 Gas budget CFU will accrue $301,692 for this annual transfer.

19


Financial Summary

Cash Balances and Reserves All four utilities combined cash balances at December 31 are detailed in the table below:

The 2018 decrease was primarily the result of capital projects and the redemption of the Electric 2010A & 2010B Capital Loan Notes of $11.8 million. The Board of Trustees has determined the minimum desired level of reserves for each utility via the cash reserve policy approved on October 10, 2018. The legally restricted reserves requirement is the cash required to be restricted per debt covenants or legal designations. The Board has made specific designations for special funds and these are labeled as Board restricted reserves. These include an Electric Generation & Transmission Acquisition Fund and a Gas Utility Capital Replacement Fund into which staff is directed to transfer cash to assist in funding very large capital expenditures and the amount is determined in the budget process and subject to change annually. The Board has also determined, by formula, recommended targets for each utility that consist of liability insurance, operating expense and CIP reserves. The Electric Generation & Transmission Acquisition Fund was established for the purchase of new or replacement electric generation or transmission capacity. Presuming the continued availability of our existing generating units, and peak needs growth trending similarly to recent history, we would not be short of capacity until 2064. We will continue to monitor generation availability and capacity markets, as ultimately we will need to make a decision on whether to invest in ownership of additional (or replacement) generation, or to contract for capacity via a bilateral agreement or the annual MISO capacity market auction. This fund could also be used for transmission investments. Transmission investments, such as the Black Hawk to Hazelton 345kv line from 2015, allow a return through the MISO Multi‐Value Project (MVP) reporting process. The Gas Utility Capital Replacement Fund was established for the replacement of the gas distribution system as it reaches the end of its theoretical 40‐year useful life in the next 10‐20 years, at a cost of over $50 million in 2019 dollars. Current research has indicated the polyethylene gas pipe may last substantially longer than the 10‐20 year remaining theoretical life and at 2026 a thorough life expectancy analysis should be completed to determine the schedule for a cost effective replacement program.

Electric Gas Water Comm. Total

2017 Actuals 49,701,379$ 8,411,506$ 6,175,320$ 6,051,370$ 70,339,575$

2018 Actuals 40,489,640$ 12,371,690$ 5,649,022$ 6,166,634$ 64,676,986$

2019 Reforecast 41,460,823$ 12,497,189$ 4,533,009$ 9,719,482$ 68,210,503$

2020 Budget 40,821,942$ 12,497,372$ 3,559,588$ 13,017,514$ 69,896,416$

Yearend Cash & Investment Balances

20


Financial Summary

The table below shows the budgeted cash reserve balances by each utility for 2020. Details are

shown in the cash flow statement for each utility in its specific section of the budget. All of the

Utilities meet the minimum recommended board reserve levels.


Unrestricted 28,823,066$ 7,335,448$ 3,312,544$ 12,572,644$ 52,043,702$

Legally Restricted 5,025,984 340,957 247,044 444,870 6,058,855

Board Restricted 6,972,892 4,820,967 ‐ ‐ 11,793,859

Total Cash & Investments 40,821,942$ 12,497,372$ 3,559,588$ 13,017,514$ 69,896,416$


Unrestricted 28,823,066$ 7,335,448$ 3,312,544$ 12,572,644$ 52,043,702$

Board Recommended 17,749,699 3,460,055 2,860,643 6,620,699 30,691,096

Surplus (Deficit) 11,073,367$ 3,875,393$ 451,901$ 5,951,945$ 21,352,606$

2020 Yearend Budgeted Cash & Investment Balances

2020 Yearend Budgeted Reserves

21

CEDAR FALLS UTILITIES

2020 Annual Operating Budget and Capital Improvement Plan

Budget Summary by Utility

ELECTRIC GAS WATER COMM. TOTAL

Operating Revenue

Retail Sales 40,897,718$ 12,878,578$ 4,543,125$ 21,458,910$ 79,778,331$

Sales for Resale 227,216 227,216

Sales for Resale ‐ MISO 8,108,500 8,108,500

FTR Revenue 415,000 415,000

Transmission Revenue 3,865,200 3,865,200

Other Operating Revenue 1,216,000 54,000 386,400 620,820 2,277,220

Total Operating Revenue 54,729,634$ 12,932,578$ 4,929,525$ 22,079,730$ 94,671,467$

Other Operating Expense* 42,890,022$ 11,712,870$ 3,649,256$ 15,136,021$ 73,388,169$

Operating Cash Flow 11,839,612$ 1,219,708$ 1,280,269$ 6,943,709$ 21,283,298$

Other Sources (Uses)

Capital Expenditures (10,474,210)$ (1,406,540)$ (2,514,090)$ (3,878,160)$ (18,273,000)$

Debt

Bond Issues for Capital 0 0 0 0 0

Bond Principal Payment (2,625,000) 0 0 0 (2,625,000)

Bond Interest Payment (713,938) 0 0 0 (713,938)

Intercompany Note 0 0 0 0 0

Note Principal Payment 0 0 0 0 0

Debt (3,338,938) 0 0 0 (3,338,938)

Other Non‐Operating Sources (Uses)

Interest Income 532,200 156,400 66,000 65,692 820,292

TIF Reimbursements 514,655 1,815 0 1,073 517,543

Interest Charges ‐ Customer Deposits (4,000) (4,000)

Other Income (Expense)* 291,800 28,800 194,400 165,718 680,718

Other Non‐Operating Sources (Uses) 1,334,655 187,015 260,400 232,483 2,014,553

Annual Cashflow Surplus / (Deficit) (638,881)$ 183$ (973,421)$ 3,298,032$ 1,685,913$

Accrual Net Income

Operating Revenues 54,729,634$ 12,932,578$ 4,929,525$ 22,079,730$ 94,671,467$

Other Operating Expense* 42,890,022 11,712,870 3,649,256 15,136,021 73,388,169

Non‐Cash Adjustments 0

OPEB & IPERS 140,180 27,606 20,705 55,004 243,495

Depreciation & Amortization 8,280,910 884,707 793,184 3,534,228 13,493,029

Total Operating Expense 51,311,112 12,625,183 4,463,145 18,725,253 87,124,693

Total Non‐Operating Revenues (Expenses) 1,334,655 187,015 260,400 232,483 2,014,553

Bond Interest Payment (713,938) 0 0 0 (713,938)

Non‐Cash Adjustments

Allowance for AFUDC (Equity) 80,487 5,048 27,847 12,072 125,454

Contribution In Aid of Construction 0 0 0 0 0

Allowance for AFUDC (Debt) 10,131 0 0 0 10,131

Debt Issue Costs/Discounts/Premium (Net) 257,824 0 0 0 257,824

Total Non‐Operating Revenues (Expenses) 969,159 192,063 288,247 244,555 1,694,024

Net Income (Loss) 4,387,681$ 499,458$ 754,627$ 3,599,032$ 9,240,798$

Net Income as a % of Revenue 8.02% 3.86% 15.31% 16.30% 9.76%

Net Operating Income (NOI) 3,418,522$ 307,395$ 466,380$ 3,354,477$ 7,546,774$ NOI as a % of Revenue 6.25% 2.38% 9.46% 15.19% 7.97%

23



Operating Budget Breakdown of Expenses

Reforecast % Budget %

2019 of Total 2020 of Total

Commodities

Natural Gas 8,121,548$ 7,171,555$

Fuel 4,831,282 5,813,891

Purchases For Resale 14,388,593 13,741,818

Joint Ownership 2,766,048 2,187,692

Transmission Network Svc. 3,300,000 3,436,800

Cable Programming 7,082,021 7,132,586

Bandwidth & Telephone Cost 693,767 755,259

Other Inventory 812,533 865,816

Total Commodities 41,995,792$ 48.9% 41,105,417$ 46.9% (890,375)$ ‐2.1%

Wages and Benefits

O&M Salaries & Labor 12,635,308$ 13,609,948$ 974,640$ 7.7%

Benefits

Medical & Dental 3,529,197 3,585,111 55,914 1.6%

FICA/IPERS/457 2,557,876 2,691,282 133,406 5.2%

Severence & Retirement Pension 226,690 304,749

Other Benefits 171,814 193,002 21,188 12.3%

Total Wages and Benefits 19,120,885$ 22.3% 20,384,092$ 23.3% 1,263,207$ 6.6%

Depreciation & Amortization 13,031,934$ 15.2% 13,493,029$ 15.4% 461,095$ 3.5%

Materials, Supplies, Services, Other 7,921,320 9.2% 8,969,405 10.2% 1,048,085 13.2%

PILOT/Transfer to the City 3,175,530 3.7% 2,936,428 3.4% (239,102) ‐7.5%

Property & Liability Insurances 798,784 0.9% 851,609 1.0% 52,825 6.6%

Interest on Debt Outstanding 600,996 0.7% 460,114 0.5% (140,882) ‐23.4%

Property Taxes 450,466 0.5% 451,486 0.5% 1,020 0.2%

Regulatory & Compliance 217,700 0.3% 223,800 0.3% 6,100 2.8%

Other Expenses & Net Accruals (1,422,224) ‐1.7% (1,300,704) ‐1.5% 121,520 ‐8.5%

Total Operating Budget Expenses 85,891,183$ 100.0% 87,574,676$ 100.0% 1,683,493$ 2.0%

Net Change

24

Aug-14Department of Management

NAME OF ENTERPRISEREVENUES DETAIL

Calendar(specify if budget is fiscal or calendar year)

Budget Re-Estimated Actual(specify budget years) 2020 2019 2018

Beginning Fund Balance 390 68,210,503 64,676,986 70,339,575

Use of Money & Property 398 820,292 966,446 776,630

Charges for Services: Hospital 411

Water 404 4,929,525 4,593,985 4,634,959

Sewer 405

Electric 406 54,729,634 53,133,913 57,637,297

Gas 407 12,932,578 13,844,473 14,203,621

Telecommunications 408 22,079,730 21,198,729 20,728,355

Total Charges for Services 414 94,671,467 92,771,100 97,204,232

Miscellaneous 416 1,198,261 1,752,636 1,710,478

Other Financing Sources:Operating Transfers In 417

Proceeds of Long Term Debt 418

Proceeds of Fixed Asset Sales 419

Total Revenues - All Sources 421 164,900,523 160,167,168 170,030,915

EXPENDITURES DETAIL


Expenditures:Hospital 338

Water 360 6,163,346 5,982,900 5,513,858

Sewer 357

Electric 361 56,707,170 54,139,574 68,721,747

Gas 362 13,119,410 13,917,833 14,514,516

Telecommunications 363 19,014,181 17,916,358 16,603,808

Total Expenditures: 386 95,004,107 91,956,665 105,353,929

Transfers Out 387

Ending Fund Balance 388 69,896,416 68,210,503 64,676,986

Total Expenditures & Transfers Out 389 164,900,523 160,167,168 170,030,915

Cedar Falls Municipal Utilities

25

Aug-14 Department of Management

ADOPTED BUDGET SUMMARYCalendar YEAR 2020

Cedar Falls Municipal Utilities (specify fiscal or calendar year budget)

NAME OF ENTERPRISE


REVENUES & OTHER FINANCING SOURCESUse of Money and Property (line 398) 241 820,292 271 966,446 301 776,630

Charges for Services (line 414) 243 94,671,467 273 92,771,100 303 97,204,232

Miscellaneous (line 416) 245 1,198,261 275 1,752,636 305 1,710,478

Operating Transfers In (line 417) 247 0 277 0 307 0

Proceeds of Long Term Debt (line 418) 248 0 278 0 308 0

Proceeds of Fixed Asset Sales (line 419) 249 0 279 0 309 0

Total Revenues & Other Financing Sources 250 96,690,020 280 95,490,182 310 99,691,340

EXPENDITURES & TRANSFERS OUTExpenditures (line 386) 255 95,004,107 285 91,956,665 315 105,353,929

Transfers Out (line 387) 259 0 289 0 319 0

Total Expenditures & Transfers Out 260 95,004,107 290 91,956,665 320 105,353,929

Excess of Revenues & Other SourcesOver (Under) Expenditures & Transfers Out 261 1,685,913 291 3,533,517 321 -5,662,589

BEGINNING Fund Balance (line 390) 262 68,210,503 292 64,676,986 322 70,339,575ENDING Fund Balance (line 388) 263 69,896,416 293 68,210,503 323 64,676,986

26


Electric Utility

Electric Generation On March 13, 1913, Cedar Falls voters passed a $50,000 revenue bond issue by more than a 2‐to‐1 margin, to fund the building of the city’s own power plant. By March 1914, two engines (Unit 1) and three fire‐tube boilers were installed, and a business office for the new utility was leased on Third Street. By the following month, the power plant was producing electricity and the first customers were served. The City Council then formally established an Electric Light & Power Department and named Clark Streeter as superintendent of the Municipal Light Plant. Cedar Falls Municipal Light Company built one of the first rural electric lines in Iowa, to serve a group of farmers living along South Main Street, at a cost of $700 per mile. Demand for electrical service kept increasing at a rapid rate, with service being extended to the North Cedar area in 1922. Growth continued into the 1930’s, with the addition of a 1,500 kW steam turbine (Unit 2) installed in a brick addition to the power plant, which doubled the generating capacity of the plant. The municipal utilities purchased the First Street Electric Company in 1936, and added a new 2,500 kW steam turbine (Unit 3) in 1937 to handle the increased load. In 1941, a hydroelectric plant was built and was able to provide about 60 percent of the city’s electrical needs during its first year of service. While useful as a reliable source of emergency alternative power, the hydro‐plant never materialized as a viable and economical generating source. The hydroelectric plant was retired in 1968. In 1948 and 1954, 5,000 kW steam turbines (Units #4 and #5) and dedicated boilers were added. In the 1950’s the voters created a separate governance structure for the Electric, Gas, and Water Utilities that were formerly departments of the City of Cedar Falls. There was additional work done to the power plant, to bring the total capacity to 15,500 kW. In 1956 an agreement was reached with the Iowa Public Service Company (IPS), now MidAmerican Energy (MEC), for the establishment of a 69 kV electric tie line. This agreement made it possible to tie in with IPS and eventually the Iowa Power Pool and the national grid. A 16,500 kW turbine‐generator (Unit 6) was commissioned in 1963 at Streeter Station. Following this in 1968 a combustion turbine was commissioned to burn fuel oil or gas (GT1). After these additions and retirements of older units, a large expansion was started in 1971 to add a 306’ high stack, pollution control equipment, cooling towers, coal unloading facilities, and rail line for the commissioning of a new steam turbine generating unit (Unit 7) in 1973 with a capacity of 35,000 kW. In 1975, the Electric Utility invested in a share (3.1%) of the Walter J. Scott Jr Energy Center Unit 3 (WS3). The Electric Utility invested in additional capacity by purchasing a share (2.5%) of the George A. Neal Generating Station Unit 4 (Neal 4) in 1985. Streeter Units 4 and 5 were then retired in 1985. A combustion turbine was acquired in 2000 to increase capacity.

30


Electric Utility

In June of 2007, Walter J Scott Jr. Energy Center Unit 4 (WS4) began commercial operations. CFU invested in a 2.02% ownership of this coal‐fired generation plant constructed by MEC, who is also the operator for WS3 and Neal 4. All of these units are located along the Missouri River. In addition, a new substation and 161 kV line was built to provide for capacity and reliability needs and was placed in service in August 2006. In 2011, CFU invested in additional capacity of WS4 by purchasing 0.96 MW, which became available to owners when Pella Municipal Electric Utility decided to sell their ownership share. This increased CFU’s initial share of ownership in WS4 from 2.02% to the current 2.14%), WS3, Neal 4, and WS4 are collectively referred to as the Western Units. MidAmerican Energy (MEC) operates the Western Units and bids the energy into the MISO market, and dispatches the units at the direction of Midwest Independent Transmission System Operator (MISO). CFU then purchases energy from MISO as needed to serve the native load retail customers. CFU is committed to cost‐effective renewable energy as part of the Strategic Plan. In 1997, CFU became a joint owner in the Iowa Distributed Wind Generation Project (IDWGP) located near Algona, Iowa. The project consisted of three 750 kW wind turbines, for a site capacity of 2,250 kW. CFU’s share of the project was 1,482 kW or about 66%. In 2016, the joint owners elected to dispose of the IDWGP assets and the sale of these wind towers was completed in 2017. In 2003, CFU entered into a 20‐year purchase power agreement with NextEra Energy for 6 MW of wind from the Hancock Wind Farm which is sold into the MISO markets. In 2016, CFU completed the construction of a photovoltaic solar farm and interested customers invested in this community solar project managed by CFU. A Federal tax credit equaling 30% of the project’s cost and a State of Iowa tax credit of up to 60% of the Federal credit were available. These incentives, coupled with a recent, rapid decline in the cost of solar panels has brought the overall cost of installing solar systems down dramatically. While still not cost competitive with our existing coal and gas fired generation, solar brings the benefit of a renewable resource. Our contract provides a system owned by a private, taxable entity (to take advantage of tax credits and accelerated depreciation), with CFU purchasing the electrical output from the solar array. Interested customers have invested in the solar array through an upfront contribution in return for monthly credits on their electric bill. These credits are in proportion to the output of the solar array and the customer’s level of contribution. Customers were allowed to invest at levels much lower than it would cost to install a solar system on their own home, and enough customers subscribed so that nearly all of the solar energy produced is paid for by these customer investments. MISO operates a capacity market in addition to an energy market. This is done through a Planning Reserve Auction (PRA) held annually to allow for the trading of Zonal Resource Credits (ZRCs). Each load serving entity in MISO must acquire enough ZRCs to supply their forecasted load plus losses and the reserve margin. ZRCs are produced by generating resources. Currently, CFU has an excess of ZRCs and has sold its excess in the PRA or in bi‐lateral agreements in recent years. Three years ago, these excess ZRCs were worth less than $10,000

31


Electric Utility

in total. For the 2016/2017 planning year, the excess was worth $756,864 and in 2017/2018 dropped back below $10,000. In 2018, CFU entered into a 5‐year bi‐lateral agreement to sell a portion of the excess ZRCs for $2.67 million over the 5‐year time period from 2019 to 2024. Total Projected Electric Utility Nameplate Generating capacity as of December 31, 2019 is:

SOURCE YEAR

INSTALLED NAMEPLATE

MW FUEL SOURCE

STREETER UNIT 6 1963 16.5 NATURAL GAS‐COAL

STREETER UNIT 7 1973 35.0 NATURAL GAS‐COAL

WS3 (3.1% share of 690 MW) 1978 21.0 COAL

WS4 (2.14% share of 790 MW) 2007 16.9 COAL

NEAL 4 (2.5% share of 630 MW)(1) 1985 15.0 COAL

COMBUSTION TURBINE 1 1968 19.6 NATURAL GAS‐OIL

COMBUSTION TURBINE 2 (2) 2000 23.8 NATURAL GAS‐OIL

NAMEPLATE CAPACITY OWNED GENERATION 147.8

HANCOCK COUNTY WIND FARM (CONTRACT) 2002 6.0 WIND

UNI COGENERATION (ASSIGNED BY CONTRACT) 1984 7.5 NATURAL GAS‐COAL

CEDAR FALLS SOLAR FARM, LLC 2016 1.5 SOLAR

TOTAL ELECTRIC NAMEPLATE GENERATION 162.8 (1) Vintage 1979 (2) Vintage 1970

CFU anticipates the need to add additional generation assets to support its load in roughly 44 years (2064). Due to the uncertainty of load growth and the age of our generating units, we will continually evaluate our capacity needs and the best strategy to meet that need. Capital improvements plans at Streeter Station include motor control centers, valve controllers and positioners, 4kV relay upgrades and fly ash silo aerator. Also, adding fire detection equipment at the gas turbines and Streeter Station are budgeted. Consideration is being given to a significant generation project which would result in a reduction of carbon dioxide and various pollutant emissions. The form of investment could be either a capital investment or an operating expense. CFU staff has modeled and shared with the CFU Board of Trustees the financial impact of a $12 million capital project, funded in 2020 by a combination of the Generation & Transmission Acquisition Fund and other excess reserves. This level of expenditure appears feasible without requiring a change in planned base rate increases. This project is not in the current 2020 budget but will be amended to include it, if it moves forward.

32


Electric Utility

Electric Transmission In 2009, CFU, along with MEC, turned over functional control of its transmission system to the non‐profit Midcontinent Independent System Operator (MISO). MISO directs the operation of transmission systems in 15 states and 1 Canadian province. CFU is now a transmission owner in MISO and receives revenue for its share of transmission revenue collected by MISO. This substantially changed CFU’s business model. CFU purchases transmission service from MISO to serve the requirements of CFU customers. MISO operates Day Ahead and Real Time Energy Markets to control transmission system congestion. CFU sells power generated to MISO in these markets and purchases energy from them to serve CFU customers. MISO also controls regional generation capacity and reliability through their Module E Tariff. As energy is scheduled, the difference between the Local Marginal Price (LMP) price at the point of injection into the network and the exit LMP price out of the network is billed as an hourly credit or charge. Thus the price of congestion and losses provide a strong price signal to limit transmission overloads. CFU participated in a major MISO transmission upgrade in 2014 and 2015 after MISO determined that a major 345 kV transmission line across the northern half of Iowa would benefit all MISO members and approved a Multi‐Value Project (MVP) to build the line that cost roughly $1 billion. This MVP project was constructed by both MEC and International Transmission Company (ITC). CFU participated in the MEC portion of the project with an 18.42% ownership of the west half of the line between Black Hawk and Hazelton substations for $4.5 million. The line was placed in service in late 2015. These assets allow the Utility to experience fewer congestion issues that impact wholesale market prices as well as providing a rate of return on invested transmission equity that offsets transmission network service charges. In 2014, a $7 million project was submitted by CFU and approved by MISO to construct a new transmission substation and transmission line to increase the capacity and reliability of the local 69kV system. This project was completed in 2017. In 2018, CFU switched to a Forward‐Looking Rate from a Historical Rate for the collection of transmission revenues. This allows CFU to collect the revenues earlier and be in line with other transmission owners in the same transmission zone. Overhead to Underground Conversion Program CFU plans to convert additional overhead to underground over the next several years that will bring the system to 20% overhead and 80% underground. The plan includes converting several areas of overhead lines to underground including the First Street project, which is in progress, in conjunction with the City street reconstruction. Benefits of an underground system include significantly higher reliability, less maintenance, a safer system to the public and employees, with much improved aesthetics. In recent customer surveys, reliability is their highest priority.

33


Electric Utility

Most outages to the electric system are on the overhead system caused by trees, animals, lightning, and overhead equipment issues. The City has passed an underground ordinance requiring all utilities in designated areas to remove their existing overhead systems and put them underground. The designated areas are those areas identified in CFU’s conversion plan, which is available upon request. The goal for the overhead to underground project is to minimize as much as possible the impact to the customer. Although the cost is higher, 80% of the underground system will be installed using boring rather than trenching, thereby minimizing the disturbance to the customer’s lawn, landscape, buildings, fence and driveways. Normally, the customer would make a contribution for the cost of the underground service and convert their meter socket. For customers within the conversion plan areas, there is no charge for either. CFU has contracted with an outside contractor to change out the meter socket at each customer premise. Total capital costs for the overhead to underground conversion projects 2020 through 2029 is estimated to be $4,065,000. Union Substation – Second Transformer A second transformer to serve distribution load at Union Substation will be added in the next few years. The load in this portion of the system has grown to the point where the loss of the existing 50‐year old transformer would result in insufficient voltage to customers when fed from adjacent substations. The project includes adding switchgear to accommodate additional distribution feeders. The budget has $1,973,400 for the substation work and another $700,000 for distribution feeder improvements in 2019 through 2021. Energy Efficiency The 2020 budget includes $1.3 million in the electric and gas energy efficiency incentives budget, which is a 30% increase above the 2019 level of $1.0 million. CFU now employs significant expertise in commercial and industrial energy efficiency, so this increased budget is necessary to fund significant CFU incentives associated with expected energy reduction projects of our customers. If cost‐effective projects are identified which would exceed this $1.3 million budget, CFU staff will request authorization from the CFU Board for additional funding. CFU will also consider the use of an outside consultant to identify efficiency and emission reduction measures which could be implemented.

34


Electric Utility

Customers As of July 31, 2019, CFU serves 19,479 electric customers. Customer information at December 31, 2017 & 2018 as reported on CFU’s annual Municipal Electric Plant and Operations Report:

Customers Sales (kWh) Revenue

Residential 17,007 162,581,923 15,825,991$

Commercial & Industrial

Small 2,198 215,402,294 16,034,305$

Large 5 44,154,930 2,923,583$

Other 163 60,654,201 3,544,600$

Total 19,373 482,793,348 38,328,479$

Customers Sales (kWh) Revenue

Residential 17,216 175,943,316 17,372,770$


Small 2,220 222,405,101 17,102,797$

Large 5 42,478,481 2,942,585$

Other 160 64,742,869 4,111,613$

Total 19,601 505,569,767 41,529,765$

2017

2018

35



Electric Utility Revenue and Expense Summary

2017 2018 2018 2019

ACTUAL ACTUAL REFORECAST BUDGET

OPERATING REVENUE

Residential Sales 15,825,991$ 17,372,769$ 16,387,607$ 16,984,615$

Commercial & Industrial Sales 18,957,888$ 20,048,032$ 19,468,986$ 19,936,348$

Governmental Sales 3,334,800$ 3,889,163$ 3,464,498$ 3,637,126$

Interdepartmental 209,800$ 219,801$ 310,051$ 339,629$

Retail Sales Subtotal 38,328,479$ 41,529,765$ 39,631,142$ 40,897,718$

Sales for Resale 785,911$ 981,176$ 922,852$ 227,216$

Sales for Resale ‐ MISO 7,768,304$ 10,086,722$ 7,102,978$ 8,108,500$

FTR Revenues 500,380$ 340,678$ 520,612$ 415,000$

Transmission Revenues 2,632,975$ 3,817,668$ 4,044,963$ 3,865,200$

Other Operating Revenue 990,542$ 881,288$ 911,366$ 1,216,000$

TOTAL 51,006,591$ 57,637,297$ 53,133,913$ 54,729,634$

NET OPERATING EXPENSE

Fuel ‐ Western Units 4,502,682$ 717,553$ 4,333,540$ 5,249,847$

Fuel ‐ Local 1,311,562$ 5,071,699$ 497,742$ 564,044$

Purchased Power 15,104,515$ 16,918,758$ 14,388,593$ 13,741,818$

MISO/NITS Transmission Costs 3,294,002$ 3,160,494$ 3,300,000$ 3,436,800$

Other Production O&M 4,379,535$ 5,323,561$ 5,583,717$ 5,274,749$

Other Operating Expense* 13,042,821$ 14,415,507$ 13,672,596$ 14,622,764$

TOTAL 41,635,117$ 45,607,572$ 41,776,188$ 42,890,022$

CASH FLOW FROM OPERATIONS 9,371,474$ 12,029,725$ 11,357,725$ 11,839,612$

NON‐OPERATING REVENUE (EXPENSE)

Investment Income 297,211$ 621,798$ 650,821$ 532,200$

Interest Charges ‐ Customer Deposits (4,204)$ (6,351)$ (4,000)$ (4,000)$

TIF Reimbursements 2,711,526$ 1,056,103$ 883,133$ 514,655$

Other Non‐Op. Revenue (Expense)* 731,352$ 194,810$ 442,890$ 291,800$

TOTAL 3,735,885$ 1,866,360$ 1,972,844$ 1,334,655$

REVENUE AVAILABLE FOR DEBT SERVICE 13,107,359$ 13,896,085$ 13,330,569$ 13,174,267$

*Does not include Depreciation, GASB Related IPERS & OPEB Expenses or AFUDC but does include

Payment in Lieu of Taxes (PILOT) of… 3,099,250$ 3,122,987$ 2,877,380$ 2,634,736$

36

Cedar Falls Utilities ‐ Municipal Electric Utility Historical Average Rate Adjustments

Cash Flow History and Projections ‐ SUMMARY 1/1/2008 1/1/2010 1/1/2011 1/1/2012 1/1/20142.0% 6.0% 5.0% 4.0% 0.5%

Cashflow Analysis Assumptions

Projected Sales Growth = 0.7% to 0.7% Historical Avg. Rate Adjust. Projected Average Rate Adjustments

Operating Expenses ‐ Other O&M = 3.5% to 3.5% 1/1/2017 1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022 1/1/2023 1/1/2024

Interest Rate ‐ Cash Balances = 1.5% to 1.5% 0.0% 0.0% 1.5% 2.0% 0.0% 1.5% 0.0% 1.5%

Debt Interest Rate = 2.5 to 5.0%

Audited Audited Budget Reforecast Budget Projection Projection Projection Projection

2017 2018 2019 2019 2020 2021 2022 2023 2024

Revenue & Expense

Total Retail Sales 482,793,348 505,569,768 498,850,000 493,452,753 492,450,000 496,018,400 499,617,031 503,246,164 506,906,066

Total MISO Sales 341,369,985 393,461,903 321,324,000 337,274,481 335,701,000 331,688,000 324,530,090 309,628,390 305,781,035

Total Electric Energy Sales (Units) 824,163,333 899,031,671 820,174,000 830,727,234 828,151,000 827,706,400 824,147,121 812,874,554 812,687,101

Total Operating Revenues 51,006,591 57,637,297 54,169,640 53,133,913 54,729,634 54,208,764 54,746,378 54,546,245 56,168,922

Total Operating Expenses 46,779,069 52,854,777 51,862,654 49,792,837 51,311,112 52,183,904 53,003,066 53,101,314 54,779,019

Net Operating Income (Loss) 4,227,522 4,782,520 2,306,986 3,341,076 3,418,522 2,024,860 1,743,312 1,444,931 1,389,903

Total Non‐Operating Revenue or (Expense) 2,553,871 713,995 1,156,410 1,444,035 969,159 802,394 973,656 1,157,369 1,386,841

Net Income (Loss) 6,781,393 5,496,515 3,463,396 4,785,111 4,387,681 2,827,254 2,716,968 2,602,300 2,776,744

NOI as a Percent of Revenue 8.29% 8.30% 4.26% 6.29% 6.25% 3.74% 3.18% 2.65% 2.47%

NI as a Percent of Revenue 13.30% 9.54% 6.39% 9.01% 8.02% 5.22% 4.96% 4.77% 4.94%

Cash Balance

Adjust Net Income To Cash

Capital Outlays (11,172,997) (8,502,932) (8,448,710) (9,030,386) (10,474,210) (7,197,980) (7,145,770) (7,219,660) (10,877,640)

Debt

Bond or Note Proceeds 0 0 0 0 0 0 0 0 0

Debt Service Payments ‐ Principal (3,370,000) (14,130,000) (2,490,000) (2,490,000) (2,625,000) (2,760,000) (2,895,000) (3,045,000) (3,195,000)

Inter‐Company Loan 0 0 0 0 0 0 0 0 0

Other Revenue & Expense Adjustments

Depreciation & Amortization 5,006,287 7,130,702 7,571,355 7,876,469 8,280,910 8,506,414 8,655,741 8,802,687 8,949,874

Other 766,694 793,976 (97,107) (170,011) (208,262) (192,428) (199,128) (212,466) (271,954)

Adjust To Cash (8,770,016) (14,708,254) (3,464,462) (3,813,928) (5,026,562) (1,643,994) (1,584,157) (1,674,439) (5,394,720)

Annual Cashflow Surplus / (Deficit) (1,988,623) (9,211,739) (1,066) 971,183 (638,881) 1,183,260 1,132,811 927,861 (2,617,976)

Total Cash & Investments

Beginning Balance 51,690,002 49,701,379 35,655,389 40,489,640 41,460,823 40,821,942 42,005,202 43,138,013 44,065,874

Annual Cashflow Surplus / (Deficit) (1,988,623) (9,211,739) (1,066) 971,183 (638,881) 1,183,260 1,132,811 927,861 (2,617,976)

Ending Balance 49,701,379 40,489,640 35,654,323 41,460,823 40,821,942 42,005,202 43,138,013 44,065,874 41,447,898

37









2017 2018 2019 2019 2020 2021 2022 2023 2024

Breakout of Cash Balance

Unrestricted Cash & Investments 41,824,406 34,238,019 26,667,412 32,240,136 28,823,066 27,238,076 25,563,387 23,646,748 18,316,522

Legally Restricted Cash & Investments

Bond & Interest Fund 411,693 278,281 278,281 218,750 230,000 241,250 253,750 266,250 107,500

Bond Reserve Fund 4,358,159 2,639,500 2,758,159 2,724,868 2,764,807 2,801,807 2,839,807 2,877,807 2,916,807

Improvement & Extension Fund 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000

Self‐Funded Insurance Plans 446,329 652,147 646,227 891,177 891,177 891,177 891,177 891,177 891,177

Streeter Landfill Closure Fund 198,750 187,000 159,000 160,000 140,000 120,000 100,000 80,000 60,000

Ending Balance 6,414,931 4,756,928 4,841,667 4,994,795 5,025,984 5,054,234 5,084,734 5,115,234 4,975,484

Board Designated Restricted Cash & Investments

Generation & Transmission Acquisition Fund 0 0 2,685,995 2,729,607 5,476,607 8,216,607 10,993,607 13,807,607 16,659,607

Security Deposit Fund 319,719 317,658 316,926 319,250 319,250 319,250 319,250 319,250 319,250

Western Units Landfill Closure Fund 1,142,323 1,177,035 1,142,323 1,177,035 1,177,035 1,177,035 1,177,035 1,177,035 1,177,035

Ending Balance 1,462,042 1,494,693 4,145,244 4,225,892 6,972,892 9,712,892 12,489,892 15,303,892 18,155,892

Total Cash & Investments 49,701,379 40,489,640 35,654,323 41,460,823 40,821,942 42,005,202 43,138,013 44,065,874 41,447,898

Board Recommended Reserves



CIP (Five Year Average) [A] 8,821,119 7,730,900 7,615,594 8,213,601 8,583,052 7,873,106 7,712,384 7,583,022 7,531,728

House Call Loan Program Reserve 640,080

Liability Insurance Deductible 1,000,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000

Surplus Determination Reserve (PILOT) 3,099,250 3,122,987 2,896,396 2,877,380 2,634,736 2,423,997 2,218,007 2,057,972 1,941,441

Operating Expense Reserve [B] 4,816,983 5,310,573 5,146,529 4,862,351 5,031,911 5,139,164 5,248,642 5,262,559 5,468,441

% of Operating Expense 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%

Board Designated Unrestricted Reserves 18,377,432 17,664,460 17,158,519 17,453,332 17,749,699 16,936,267 16,679,033 16,403,553 16,441,610

Surplus (Deficit) 23,446,974 16,573,559 9,508,893 14,786,804 11,073,367 10,301,809 8,884,354 7,243,195 1,874,912

[A] = Net of bond proceeds.

[B] = Does not include Depreciation, PILOT and expenses from IPERS unfunded liability or OPEB

38









2017 2018 2019 2019 2020 2021 2022 2023 2024

Financial Ratios

Goal

Debt Service Coverage ‐ Revenue Debt ‐ Bond

Covenant1.25+ 2.66 2.81 3.54 3.99 3.93 3.50 3.47 3.42 3.46

Debt Service Coverage ‐ All Debt ‐ Bond

Covenant1.75+ 2.66 2.81 3.54 3.99 3.93 3.50 3.47 3.42 3.46

Unrestricted Cash Balances as % of Operating

Expenses Without Depreciation, PILOT, &

NPL/OPEB

50%+ 108.53% 80.59% 64.77% 82.88% 71.60% 66.25% 60.88% 56.17% 41.87%

Net Operating Income (NOI) as a % of Revenue6%+ 8.29% 8.30% 4.26% 6.29% 6.25% 3.74% 3.18% 2.65% 2.47%

Net Income (NI) as a % of Revenue 6%+ 13.30% 9.54% 6.39% 9.01% 8.02% 5.22% 4.96% 4.77% 4.94%

Cash Surplus (Deficit) after Legal & Board

Recommended Reserves$0 23,446,974$ 16,573,559$ 9,508,893$ 14,786,804$ 11,073,367$ 10,301,809$ 8,884,354$ 7,243,195$ 1,874,912$

39


Gas Utility

Gas Distribution The City of Cedar Falls, Iowa was previously served by the Citizens Gas and Electric Company. However, in the 1920’s, public interest grew significantly in municipal ownership of a gas utility. A vote on the gas franchise passed by a 7‐to‐1 margin. Plans for a high‐pressure manufactured gas system followed almost immediately. The gas distribution system was purchased from Iowa Public Service Company at a cost of $83,000. When Northern Natural Gas Company announced plans to build a transmission pipeline near Cedar Falls in the 1950’s, plans were developed to overhaul the entire gas system to use natural gas. The existing system was updated where possible and new gas mains and services were constructed. New gas meters were installed throughout the system and gas appliances at 2,750 customer locations were converted to natural gas. Cedar Falls continued to grow and the increases in industrial and residential customers required additional supplies of natural gas and the expansion of the distribution system.

Natural gas service was extended into northern Cedar Falls in 1982 and 1983. The Gas Utility unveiled a plan in 1983 to replace all cast iron and bare steel gas mains and services with polyethylene pipe. Polyethylene pipe was selected to prevent future corrosion problems. Customer gas meters were moved outside as part of this replacement project. This notable system improvement project greatly improved the safety and reliability of the CFU natural gas system, and annual operational and maintenance costs were reduced. This project began in 1984 and was completed in 1997. In 2014, the Gas Utility financed the construction of Town Border Station (TBS#4) by Northern Natural Gas (NNG) to provide a new gas feed into the gas distribution system. This station is now the primary feed into Cedar Falls with the existing Town Border Station (TBS#1) placed into a secondary feed role for redundancy. TBS #4 required a system extension to tie into the distribution system and has supplied a more reliable feed into the system. In 2015 TBS #1 was upgraded by CFU to enhance its reliability and operation. The Gas Utility distribution system is made up of over 223 miles of pipe ranging in size from 1” in diameter to 12” in diameter. The system piping materials include 188 miles of high‐density polyethylene and 38 miles of wrapped steel. The distribution system also includes 12,308 gas services, including 10,908 high‐density polyethylene services and 1,400 wrapped steel services. All of the wrapped steel gas mains and services are cathodically protected. The system is operated at two different distribution pressures; high pressure at 55 psig and medium pressure at 5 psig. Gas main extension, relocation, abandonment, and replacement projects coincide with city and state road reconstruction, street restoration, drain tile installation, and sanitary and storm sewer repairs or replacements along with new developments. Budgeted 2020 replacements include 2nd and 3rd Streets downtown, Cedar Heights Road reconstruction from Greenhill to Viking Road, Madison from Valley Park to Waterloo Road, balance of W. 1st Street, and other miscellaneous locations.

42


Gas Utility

Potential 2020 gas main extensions for new developments include West Fork Addition, Cedar Falls High School, Arbors Addition, Prairie West Addition, and Wild Horse Addition. Total capital costs for these gas main replacement, relocation, and extension projects 2020 through 2029 are estimated at $3,254,000. Gas Supply The Gas Utility has a transportation contract with Northern Natural Gas Company (NNG). The gas is transported to the Town Border Stations over NNG’s interstate pipeline system. The contract is for 23,184 MMBTU per day January through October 2020. This includes 15,463 MMBTU specifically contracted for the Electric Utility to generate during the months of April through October. On November 1, 2020, the volume increases to 23,532. Each November 1st there is a 1.5% volume increase. In addition, the Gas Utility contracts with BP Canada Energy Marketing Corporation for our gas commodity purchases and to act as CFU’s agent for pipeline nominations. The Gas Utility uses BP’s interruptible storage capacity for the flexibility required for our gas nomination process. The Gas Utility continues exploring other means to secure reliable and cost effective sources of natural gas for its customers. Membership in a joint arrangement with two municipal utilities in Nebraska has been established to secure gas under prepaid agreements. The Gas Utility has entered into four prepay agreements with Central Plains Energy Project that currently provide for 31‐37% of the average daily take at a discount to monthly index. The agreements include one with less than one remaining year and another with possible five‐year extensions until 2039, a third with twenty‐three years remaining, and a fourth agreement was completed with flows beginning in August 2019. Energy Efficiency The 2020 budget includes $1.3 million in the electric and gas energy efficiency incentives budget, which is a 30% increase above the 2019 level of $1.0 million. CFU now employs significant expertise in commercial and industrial energy efficiency, so this increased budget is necessary to fund significant CFU incentives associated with expected energy reduction projects of our customers. If cost‐effective projects are identified which would exceed this $1.3 million budget, CFU staff will request authorization from the CFU Board for additional funding. CFU will also consider the use of an outside consultant to identify efficiency and emission reduction measures which could be implemented.

43


Gas Utility

Customers As of July 31, 2019, the Gas Utility serves 14,576 natural gas customers. Customer information at December 31, 2017 & 2018 as reported on CFU’s annual Municipal Gas Plant and Operations Report:

Customers Sales (MCFs) Revenue

Residential 13,220 827,258 6,439,299$


Small 1,131 604,530 3,345,255$

Large 28 187,994 953,547$

Other 131 262,412 1,466,543$

Total 14,510 1,882,194 12,204,644$

Customers Sales (MCFs) Revenue

Residential 13,237 946,996 7,147,448$


Small 1,145 522,369 3,254,915$

Large 28 203,742 1,040,922$

Other 120 596,349 2,709,903$

Total 14,530 2,269,456 14,153,188$

2017

2018

44



Gas Utility Revenue and Expense Summary

2017 2018 2019 2020


OPERATING REVENUE



Governmental Sales 804,760$ 1,298,497$ 2,051,513$ 2,411,316$


Other Operating Revenue 38,749$ 50,434$ 56,193$ 54,000$

TOTAL 12,243,393$ 14,203,621$ 13,844,473$ 12,932,578$


Purchased Gas Supply 7,002,522$ 8,626,564$ 8,121,548$ 7,171,555$


TOTAL 10,894,828$ 12,720,736$ 12,476,404$ 11,712,870$


NON‐OPERATING ADJUSTMENTS


TIF Reimbursements 29,792$ 36,370$ 12,765$ 1,815$


TOTAL 189,091$ 271,079$ 198,859$ 187,015$


*Does not include Depreciation, GASB Related IPERS & OPEB Expenses or AFUDC but does include

Payment in Lieu of Taxes (PILOT) of… 330,750$ 279,694$ 298,150$ 301,692$

45

Cedar Falls Utilities ‐ Municipal Gas Utility Historical Average Rate Adjustments

Cash Flow History and Projections ‐ SUMMARY 5/1/2002 1/1/2004 1/1/201025.0% ‐5.0% 3.0%





Debt Interest Rate = N/A


2017 2018 2019 2019 2020 2021 2022 2023 2024

Revenue & Expense

Total Gas Unit Sales (MCF) 1,882,195 2,269,456 2,007,677 2,580,253 2,713,923 2,713,923 2,713,923 2,713,923 2,713,923



Net Operating Income (Loss) 334,673 575,287 243,189 495,587 307,395 215,057 119,508 51,557 13,230

Total Non‐Operating Revenue or (Expense) 194,992 276,853 107,070 208,736 192,063 162,597 168,495 176,595 184,643

Net Income (Loss) 529,665 852,140 350,259 704,323 499,458 377,654 288,003 228,152 197,873



Cash Balance


Capital Outlays (1,269,581) (1,284,713) (1,712,370) (1,441,429) (1,406,540) (1,178,820) (1,034,390) (1,001,830) (1,038,250)

Debt

Bond Proceeds 0 0 0 0 0 0 0 0 0

Debt Service Payments ‐ Principal 0 0 0 0 0 0 0 0 0

Inter‐Company Loan

Note Proceeds (3,400,000) 4,000,000 0 0 0 0 0 0 0


Depreciation & Amortization 1,028,127 813,165 858,974 844,876 884,707 924,934 958,648 988,232 1,016,884

Other (695,619) (420,408) 35,048 17,729 22,558 23,590 25,692 25,592 25,487

Adjust To Cash (4,337,073) 3,108,044 (818,348) (578,824) (499,275) (230,296) (50,050) 11,994 4,121

Annual Cashflow Surplus / (Deficit) (3,807,408) 3,960,184 (468,089) 125,499 183 147,358 237,953 240,146 201,994



Annual Cashflow Surplus / (Deficit) (3,807,408) 3,960,184 (468,089) 125,499 183 147,358 237,953 240,146 201,994

Ending Balance 8,411,506 12,371,690 11,855,397 12,497,189 12,497,372 12,644,730 12,882,683 13,122,829 13,324,823

47









2017 2018 2019 2019 2020 2021 2022 2023 2024




Bond & Interest Fund 0 0 0 0 0 0 0 0 0

Bond Reserve Fund 0 0 0 0 0 0 0 0 0

Improvement & Extension Fund 0 0 0 0 0 0 0 0 0


Ending Balance 148,076 262,839 167,240 340,957 340,957 340,957 340,957 340,957 340,957


Capital Replacement Fund 2,335,722 3,144,291 3,951,525 3,979,117 4,820,967 5,664,817 6,521,667 7,391,517 8,274,367

Ending Balance 2,335,722 3,144,291 3,951,525 3,979,117 4,820,967 5,664,817 6,521,667 7,391,517 8,274,367






House Call Loan Program Reserve 391,544

Liability Insurance Deductible 200,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000

Surplus Determination Reserve (PILOT) 330,750 279,694 284,478 298,150 301,692 310,987 327,906 349,578 365,144




Surplus (Deficit) 2,563,358 5,406,179 4,569,789 4,544,081 3,875,393 3,186,675 2,476,532 1,633,182 878,118



48









2017 2018 2019 2019 2020 2021 2022 2023 2024

Financial Ratios

Goal


Covenant1.25+ N/A N/A N/A N/A N/A N/A N/A N/A N/A





NPL/OPEB

50%+ 56.11% 72.06% 79.20% 67.15% 64.28% 57.43% 49.09% 39.60% 34.19%




Recommended ReservesZero 2,563,358$ 5,406,179$ 4,569,789$ 4,544,081$ 3,875,393$ 3,186,675$ 2,476,532$ 1,633,182$ 878,118$

49


Water Utility

Water Supply The Municipal Water Utility of the City of Cedar Falls, Iowa (Water Utility) was established in 1888. The springs below Pfeiffer Springs Park provided the water supply. Steam powered pumps at the east end of East 12th Street, housed near the present day CFU electric power plant, pumped the water to the 126,000 gallon capacity reservoir that provided the city’s water storage. The distribution system consisted of nine miles of cast‐iron pipe. Three wells were dug in 1912 for a safer source of water. By 1928 two additional wells had been dug and a new 125‐horsepower centrifugal pump was in operation, with a daily capacity of 1.5 million gallons. Over 1,600 water meters were in place during this time. The Water Utility continued to expand along with the Electric and Gas Utilities. The original five wells were replaced with eight deeper wells for a combined maximum daily capacity of 21.6 million gallons. The water is pumped from the Silurian‐Devonian Aquifer and is of high quality requiring minimal treatment. Direct injection of chlorine takes place at all eight wells and direct injection of fluoride takes place at four wells to supplement natural levels. Water Distribution CFU provides water service to most of the developed portions of the city through the distribution system that consists of over 211 miles of cast iron and ductile iron mains ranging in size from 4‐inch through 20‐inch. Four elevated tanks provide a total storage capacity of 2.5 million gallons. There are 2,247 fire hydrants throughout the distribution system. The Water Utility is committed to providing quality water to the customers of CFU. As reported in our 2019 Consumer Confidence Report, CFU water meets all Federal and State water quality standards. There are major city and state reconstruction and construction projects that will continue through 2022. These road projects will require relocations, replacements, or abandonment of existing water mains and services as well as the extension of new water main. Water replacements in 2020 will include Madison St, Lilac Ln, W 12th St, Washington St, Idaho Rd, W 2nd and 3rd (Main to Washington), and the remaining portion of the reconstruction of West 1st St. Relocation work also includes Cedar Heights starting at the Greenhill Rd intersection and continuing south. New water main will be installed on Cedar Heights from Huntington to Viking Rd. New water main extensions by developers in 2020 are likely to occur in West Fork Addition, CF High School, Arbors Addition, Prairie West Addition, and Wild Horse Addition. Total capital costs of these water main replacement, relocation and extension projects 2020 through 2029 are estimated at $16,397,000.

52


Water Utility

Customers As of July 31, 2019, the Water Utility serves 14,462 customers. Customer information at December 31, 2017 & 2018:

Customers CCFs Gallons Revenue

Residential 12,329 909,898 680,603,704 2,810,140$

Commercial 1,441 493,580 369,197,840 1,025,766$

Industrial 35 37,128 27,771,744 58,673$

Governmental 207 218,123 163,156,004 381,636$

Other 3 8,521 6,373,708 10,328$

Total 14,015 1,667,250 1,247,103,000 4,286,543$

Customers CCFs Gallons Revenue

Residential 12,528 832,912 623,018,176 2,890,149$

Commercial 1,459 479,718 358,829,064 57,829$

Industrial 36 35,828 26,799,344 1,028,636$

Governmental 200 186,533 139,526,684 242,539$

Other 3 15,566 11,643,368 18,291$

Total 14,226 1,550,557 1,159,816,636 4,237,444$

2017

2018

Sales

Sales

53



Water Utility Revenue and Expense Summary

2017 2018 2019 2020


OPERATING REVENUE



Governmental Sales 381,636$ 242,539$ 244,986$ 281,045$



TOTAL 4,661,051$ 4,634,959$ 4,593,985$ 4,929,525$



TOTAL 2,794,232$ 2,962,892$ 3,374,766$ 3,649,256$




TIF Reimbursements 76,065$ 114,887$ 0$ 0$


TOTAL 354,594$ 352,601$ 272,902$ 260,400$


*Does not include Depreciation, GASB Related IPERS & OPEB Expenses, AFUDC or Noncash Contributions in

Aid of Construction

54

Cedar Falls Utilities ‐ Municipal Water Utility Historical Average Rate Adjustments






Debt Interest Rate =5.5%


2017 2018 2019 2019 2020 2021 2022 2023 2024

Revenue & Expense

Total Water Unit Sales (ccf) 1,667,250 1,550,557 1,621,502 1,520,696 1,575,388 1,575,388 1,575,388 1,575,388 1,575,388



Net Operating Income (Loss) 1,085,975 937,110 399,240 398,045 466,380 718,214 989,555 1,070,358 1,275,423

Total Non‐Operating Revenue or (Expense) 1,610,662 1,434,642 239,500 330,113 288,247 244,873 235,905 238,623 247,072

Net Income (Loss) 2,696,637 2,371,752 638,740 728,158 754,627 963,087 1,225,460 1,308,981 1,522,495



Cash Balance


Capital Outlays (1,862,156) (3,023,279) (2,429,730) (2,608,134) (2,514,090) (2,253,470) (1,918,690) (1,939,180) (2,397,000)

Debt

Bond or Note Proceeds 0 0 0 0 0 0 0 0 0

Debt Service Payments ‐ Principal 0 0 0 0 0 0 0 0 0

Inter‐Company Loan 0 0 0 0 0 0 0 0 0


Depreciation & Amortization 757,059 724,880 818,615 800,469 793,184 840,952 883,768 920,223 957,067

Non‐Cash Contribution In Aid of Construction (1,218,972) (1,039,024) 0 0 0 0 0 0 0

Other 172,155 439,373 14,151 (36,506) (7,142) (4,043) 925 207 (5,916)

Adjust To Cash (2,151,914) (2,898,050) (1,596,964) (1,844,171) (1,728,048) (1,416,561) (1,033,997) (1,018,750) (1,445,849)

Annual Cashflow Surplus / (Deficit) 544,723 (526,298) (958,224) (1,116,013) (973,421) (453,474) 191,463 290,231 76,646



Annual Cashflow Surplus / (Deficit) 544,723 (526,298) (958,224) (1,116,013) (973,421) (453,474) 191,463 290,231 76,646

Ending Balance 6,175,320 5,649,022 3,401,497 4,533,009 3,559,588 3,106,114 3,297,577 3,587,808 3,664,454

55









2017 2018 2019 2019 2020 2021 2022 2023 2024




Bond & Interest Fund 0 0 0 0 0 0 0 0 0


Construction Fund 0 0 0 0 0 0 0 0 0



Ending Balance 103,938 199,764 135,767 247,044 247,044 247,044 247,044 247,044 247,044


Ending Balance 0 0 0 0 0 0 0 0 0







Operating Expense Reserve [B] 349,279 370,362 423,869 421,846 456,157 469,726 486,167 505,245 510,429



Surplus (Deficit) 3,236,152 2,591,592 663,225 1,417,406 451,901 (61,064) 134,528 343,835 163,535



56









2017 2018 2019 2019 2020 2021 2022 2023 2024

Financial Ratios

Goal







NPL/OPEB

50%+ 217.28% 183.92% 96.31% 127.00% 90.77% 76.08% 78.43% 82.65% 83.69%




Recommended ReservesZero 3,236,152$ 2,591,592$ 663,225$ 1,417,406$ 451,901$ (61,064)$ 134,528$ 343,835$ 163,535$

57


Communications Utility

Communications Backbone The Communications Utility was established in 1994 after a Cedar Falls citizen referendum passed, by a 70 percent majority. Originally, CFU constructed and operated a city‐wide hybrid system providing a range of communications and entertainment services. The broadband coaxial network was a hybrid fiber/coaxial system consisting of 21 service areas or nodes. There were approximately 310 miles of coaxial cable and 97 miles of fiber in the distribution system. In 2013 the Communications Utility completed a system wide upgrade to the entire communications plant to fiber‐to‐the‐premises (FTTP) infrastructure and capabilities that was started in 2009. FTTP provides hundreds of times more bandwidth capacity than is commonly available from cable TV or telephone companies in the United States. Fiber optic data and video services enter the home or business through a single gateway, known as an optical network terminal (ONT). This new service delivers a crisp, clear television picture and always‐on internet access at download speeds up to 1,000 megabits (1 gigabit) per second. In August 2010, CFU received notice that Rural Utility Service (RUS), an arm of United States Department of Agriculture (USDA), approved our application to extend high speed internet services to rural Cedar Falls customers. The design was a combination of FTTP and fixed wireless with FTTP being built to areas with higher customer density and the remaining being served with fixed wireless. The fiber system made available both cable and high speed internet whereas the wireless system provides internet only. FTTP is a far superior service providing the highest bandwidth option. Fixed wireless is price competitive with customers’ current satellite options as well as providing them with higher speeds. Construction began in the fall of 2012 and was completed in 2015. Upgrades to the wireless signal and receiving equipment completed in 2019 should provide improved speeds. We are finishing up the third year of a three‐year project to replace our core switches in 2019. As more services become IP‐enabled, the features and functionality of our core network become more important. All customer data and voice traffic flows through our cores, and with IPTV all video traffic will as well. These upgrades will allow delivery of true carrier‐class service and will meet customer needs well for many years to come. Our plan for the deployment of Carrier Grade Network Address Translation (CG‐NAT) has changed. CG‐NAT is technology implemented in hardware and software to preserve the limited number of internet protocol version four (IPv4) addresses assigned to us while we, and the internet in general, transition to IPv6. We found that the introduction of this technology would have a negative impact to some customers, would complicate our network topology, and was more expensive than purchasing additional IPv4 addresses in the secondary market. As such we have abandoned our plans for CG‐NAT and are moving forward with the purchase of more IPv4 address space.

60



We have nearly 12,000 Motorola ONT’s which are at end of life and need to be replaced. We originally budgeted for this replacement to start in 2019 and take three years. We are planning a slower ramp up now for this project and have extended this out by one year. We will install new Calix optical line terminals (OLT’s) in our fiber hub sites and head end which will support the new 10‐gigabit‐capable symmetric passive optical network (XGS‐PON) standard as well as the gigabit passive optical network (GPON) standard we use today. This will allow us to mix and match 1gb and 10gb services across our network. This new Calix system will also support the next PON standard, NG‐PON2 which will support multiple 10gb services per PON. Today each PON on our network serves 32 customers. Services In 1994 the first fiber optic installation was to Doerfer Engineering and the first residential cable television customer was connected in 1996. Following the introduction of cable television service, the Communications Utility introduced CyberNet, its own high‐speed Internet access via cable modem instead of a phone line. The first CyberNet customer was connected in 1997. The Utility also began offering high‐speed data services such as Fiber CyberNet, Point‐to‐Point service, and other Specialized Telecommunications Services for residential, commercial and industrial customers. The Communications Utility launched digital cable television service in November 2001 and high‐definition cable service in November 2003. Then in 2006, introduced fiber‐to‐the‐premises (FTTP) technology in several new commercial and residential developments and with the 2013 completion of the fiber upgrade to the system, new FiberNet services replaced the previous CyberNet ones. In May 2013, CFU became the first provider in Iowa to offer internet service at 1 gigabit per second as a standard product available community‐wide. The service is available to residential and business customers. With this upgrade from CFU, Cedar Falls ranks among the top communities in the nation for broadband speed and availability. In 2015, the Communications Utility received approval from the Board of Trustees to provide telephone service to the community of Cedar Falls. This new service was available to subscribers starting in the second quarter of 2016. CFU selected ImOn from Cedar Rapids, Iowa as the wholesale telephone‐switching provider for this new service. Our partnership with Waverly Utilities in a new internet protocol television (IPTV) video head end in 2015, expanded to include Bellevue Municipal Utilities in 2017, Indianola Municipal Utilities in 2018 and Vinton Municipal Utilities in 2019. With Board approval, we anticipate the addition of two more partners in 2020.

61



With the ONT conversion project starting 2019, we will visit each home and business which currently has a Motorola ONT and convert them to one of the Calix ONT systems. Customers who have only data service will get an XGS‐PON ONT, while customers who have video service will get a GPON ONT in order to keep costs low and disrupt them the least. We plan to keep the traditional RF video system in place for a period of time instead of converting the entire system to internet protocol (IP)‐based video right away. The GPON ONT’s can support RF while the XGS‐PON ONT’s do not. Keeping RF allows us to leverage the investment of thousands of EZ‐HD set top boxes (STB’s) we have deployed, and also does not require a STB on every TV, saving us thousands of more STB’s. Customers who have RF STB’s other than the EZ‐HD’s will get new IP STB’s which have the new guide and advanced video features. Current data‐only customers already migrated to XGS‐PON can subscribe to video services via PowerDVR even though that technology does not support RF. We are working to deploy a system which will allow us to deliver our video service through an application on Amazon Fire TV, Apple TV, Android or Apple iOS devices. This will match the way customers are expecting to consume video content and keeps costs low for everyone by using devices they may already have in their home. In year three of the project we are hopeful to deploy all XGS‐PON ONT’s and transition to IP video. This will be contingent upon the success of the app‐based video solution before then. Customers As of July 31, 2019, the Communications Utility serves 8,579 retail TV customers, 14,614 internet customers, and 3,174 phone lines.

62



Communications Utility Revenue and Expense Summary

2017 2018 2019 2020


OPERATING REVENUE

Cable Services 9,191,604$ 9,395,199$ 9,500,174$ 9,670,510$

Data/Phone Services 9,890,857$ 10,598,389$ 11,240,122$ 11,788,400$


TOTAL 19,751,269$ 20,728,355$ 21,198,729$ 22,079,730$


Programming Expenses 6,590,487$ 6,977,855$ 7,082,021$ 7,132,586$

Data/Phone Bandwidth Access Expenses 692,217$ 846,773$ 693,767$ 755,259$


TOTAL 13,171,425$ 14,274,957$ 14,409,107$ 15,136,021$




Contributions In Aid of Construction 54,145$ 66,300$ ‐$ ‐$

TIF Reimbursements 10,081$ 2,146$ 1,610$ 1,073$

Other Income (Expense) 68,613$ 13,492‐$ 203,175$ 165,718$

TOTAL 155,283$ 70,717$ 270,477$ 232,483$


*Does not include Depreciation, AFUDC, or GASB Net Pension & OPEB Liabilities

63

Cedar Falls Utilities ‐ Municipal Communications UtilityCash Flow History and Projections ‐ SUMMARY

Cashflow Analysis AssumptionsOperating Expenses ‐ Other O&M = 3.5%

Interest Rate ‐ Cash Balances = 1.5%

Debt Interest Rate = N/A Audited Audited Published Reforecast Budget Projection Projection Projection Projection2017 2018 2019 2019 2020 2021 2022 2023 2024

Revenue & Expense

Cable Operating Revenues $9,826,497 $10,095,260 $10,317,121 $9,932,538 $10,252,874 $10,960,650 $11,052,946 $11,050,560 $11,259,427

Data Operating Revenues $9,924,772 $10,633,095 $11,247,433 $11,266,191 $11,826,856 $12,254,723 $12,720,340 $13,154,660 $13,563,736

Total Operating Revenues $19,751,269 $20,728,355 $21,564,554 $21,198,729 $22,079,730 $23,215,373 $23,773,287 $24,205,221 $24,823,163

Cable Operating Expenses $10,884,973 $11,873,524 $12,228,259 $11,856,436 $11,877,233 $12,742,538 $12,976,117 $13,277,815 $13,671,647

Data Operating Expenses $4,944,398 $5,920,409 $6,447,953 $6,103,711 $6,848,020 $7,229,307 $7,695,724 $7,986,132 $8,515,597

Total Operating Expenses $15,829,371 $17,793,933 $18,676,212 $17,960,147 $18,725,253 $19,971,845 $20,671,841 $21,263,947 $22,187,244

Net Operating Income (Loss) $3,921,898 $2,934,422 $2,888,342 $3,238,582 $3,354,477 $3,243,528 $3,101,446 $2,941,274 $2,635,919

Total NonOperating Revenue or (Expense) $123,517 $7,682 $80,510 $301,239 $244,555 $234,864 $245,444 $253,761 $263,343

Net Income (Loss) $4,045,415 $2,942,104 $2,968,852 $3,539,821 $3,599,032 $3,478,392 $3,346,889 $3,195,035 $2,899,262

NOI as a Percent of Revenue (operating margin) 19.86% 14.16% 13.39% 15.28% 15.19% 13.97% 13.05% 12.15% 10.62%


Cash Balance


Net Income (Loss) $4,045,415 $2,942,104 $2,968,852 $3,539,821 $3,599,032 $3,478,392 $3,346,889 $3,195,035 $2,899,262

Capital Outlays (2,535,449) (2,631,619) (4,858,190) (3,507,251) (3,878,160) (5,256,730) (5,546,150) (5,603,330) (2,359,110)

Debt:

Bond Proceeds

Bond Payments ‐ Interest (288,680) 0

Bond Payments ‐ Principal (8,850,000) 0

Inter‐Company Loan

Note Proceeds 4,000,000

Note Payments ‐ Interest (12,000) (80,000)

Note Payments ‐ Principal (600,000) (4,000,000)

Revenue & Expense Adjustments:

Depreciation & Amortization 2,528,410 3,338,680 3,514,818 3,510,120 3,534,228 3,824,103 4,214,224 4,424,264 4,795,928

Other 217,082 546,099 154,434 10,158 42,932 45,510 44,341 45,290 44,950

Adjust To Cash (5,540,637) (2,826,840) (1,188,938) 13,027 (301,000) (1,387,117) (1,287,585) (1,133,776) 2,481,768

Annual Cashflow Surplus / (Deficit) (1,495,222) 115,264 1,779,914 3,552,848 3,298,032 2,091,275 2,059,304 2,061,259 5,381,030



Annual Cashflow Surplus / (Deficit) (1,495,222) 115,264 1,779,914 3,552,848 3,298,032 2,091,275 2,059,304 2,061,259 5,381,030

Ending Balance 6,051,370 6,166,634 7,115,563 9,719,482 13,017,514 15,108,789 17,168,093 19,229,352 24,610,382

65






Unrestricted Cash & Investments Balance 5,225,974 5,803,876 6,871,556 9,274,612 12,572,644 14,663,919 16,723,223 18,784,482 24,165,512


Bond & Interest Fund 631,914 0 0 0 0 0 0 0 0



Dental Self‐Funded Insurance 18,281 18,666 18,000 20,000 20,000 20,000 20,000 20,000 20,000

Health Self‐Funded Insurance 175,201 344,092 226,007 424,870 424,870 424,870 424,870 424,870 424,870

Construction Fund 0 0 0 0 0 0 0 0 0

Ending Balance 825,396 362,758 244,007 444,870 444,870 444,870 444,870 444,870 444,870


Ending Balance 0 0 0 0 0 0 0 0 0







Surplus Determination Reserve (PILOT) 0 0 0 0 0 0 0 0 0




Surplus (Deficit) (448,274) (1,100,276) 31,299 2,515,150 5,951,945 8,101,789 10,685,896 13,028,807 18,447,123



66





Financial Ratios

Goal

Debt Service Coverage ‐ Revenue Debt ‐

Bond Covenant1.25+ N/A N/A N/A N/A N/A N/A N/A N/A N/A


Covenant1.75+ 1.68 N/A N/A N/A N/A N/A N/A N/A N/A

Unrestricted Cash Balances as % of

Operating Expenses Without Depreciation,

PILOT, & NPL/OPEB

50%+ 39.68% 40.66% 45.86% 64.37% 83.06% 91.12% 101.95% 111.91% 139.39%

Net Operating Income (NOI) as a % of

Revenue6%+ 19.86% 14.16% 13.39% 15.28% 15.19% 13.97% 13.05% 12.15% 10.62%



Recommended Reserves$0 (448,274)$ (1,100,276)$ 31,299$ 2,515,150$ 5,951,945$ 8,101,789$ 10,685,896$ 13,028,807$ 18,447,123$

67


Personnel Summary

Overview The organizational structure of Cedar Falls Utilities (CFU) reflects its commitment to its Mission Statement “To provide our customers with innovative, high‐quality utility services that bring the best value to the community” and its Vision Statement to “achieve a standard of excellence as an industry leader and a trusted provider of utility services to our customers and community”. These statements guide CFU in making further changes and progressing forward as an effective and efficient organization. The current structure divides the organization into Administration and five business units. Business Unit Departments

Administration Administration

Communication Services Communication Operations, Meter Reading, Information Systems

Customer Service and Business Development Customer Service, Energy Service, Sales & Business Development, Marketing

Electric, Gas and Water Operations Electric Production, Electric Distribution, Electric Operations, Gas & Water Operations, Gas & Water Construction, Transportation Services

Employee and Legal Services

Employee & Legal Services

Finance and Organizational Services Finance, Inventory Purchasing & Warehousing, General Purchasing & Facilities

The CFU organization continually evaluates staffing needs for technical talent and expertise to successfully meet the complex challenges of a four‐utility service provider and achieving the outcomes of the capital improvement plan, operating budget maintenance plans and succession planning. Staffing among the full‐time employee groups currently and budgeted are as follows:

CFU relies on seasonal and part time staffing to help during the busy construction season and supplementing of the regular CFU work force. These positions are used in supporting various projects for all four utilities and staffing of the help desk and administrative duties.

2019 2020 Change

Salaried 67 69 2

Office Hourly 36 36 0

Operating Hourly 72 73 1

Temporary 1 2 1

Total Full Time staff 176 180 4

70


Personnel Summary

Staffing among the part‐time employee groups currently and budgeted are as follows:

Staffing counts comparisons and projections are as follows:

The Administration business unit is responsible for carrying out the CFU Mission, Vision, and Core Values. Strategic initiatives which accomplish the department objectives are driven by the General Manager/Chief Executive Officer. The Administration business unit has the following staffing in September 2019:

2019 2020 Change

Seasonal 8 9 1

Part Time 16 17 1

Total Part Time staff 24 26 2

EMPLOYEES 2014 2015 2016 2017 2018

2019

Published

2019

Current

2020

Budget 2021 2022 2023 2024

SEASONAL 8 9 5 6 6 7 8 9 9 9 9 9

PART TIME 16 16 16 17 15 15 16 17 15 15 15 15

TEMPS 0 0 4 3 1 2 1 2 2 2 1 1

FULL TIME 178 170 171 170 172 176 175 178 175 174 174 174

TOTALS 202 195 196 196 194 200 200 206 201 200 199 199

BOARD OF TRUSTEES

Jeff Engel, Richard McAlister, Craig Johnson, MaraBeth Soneson, Deb Iehl

General Manager (CEO) Executive Assistant

Steve Bernard Renee Weber

Director of Customer Service & Business Development (CRO)

Mike Litterer

Director of Communications Services (CTO)

Rob Houlihan

Director of Electric, Gas, & Water Operations (COO)

William Skubal Jr.

Director of Employee & Legal Services (General Counsel)

Susan Abernathy

Director of Finance & Organizational Services (CFO)

Wynette Froehner

71


Personnel Summary

Customer Service and Business Development (CSBD) Business Unit The Customer Services and Business Development business unit provides the business platform for CFU as based upon customer needs and development of the CFU Vision. The Director of this business unit functions as the Chief Relationship Officer. The Energy Services department is charged with providing services intended to assist CFU customers in energy management and conservation such that additional energy capacity can be deferred and the economic value of existing utility facilities can be maximized. This department was enhanced in 2018 with the hiring of an Energy Services Assistant Manager with expertise in commercial customers. His engineering skills will improve efforts to serve the needs of commercial and key accounts through personal attention, special programs, and contractual relationships. The staff also hosts regular key accounts meetings, allowing time to thank these customers and provide useful industry‐related presentations. The Customer Service department is charged with customer relations services and billing. This department is the main sources of customer contact and is responsible for updating of the customer records, and the offering of credit services that are designed to be fair and relationship‐enhancing. In 2018 staff worked on a billing system conversion and implementation of credit card fees and customer education on a new web self‐services feature. The Marketing department is responsible for providing a dedicated marketing function capable of enabling CFU to offer products its customers’ desire, at a cost‐effective price and in a timely manner. In addition, this department assembles market demographic information as required so that CFU can offer innovative, high‐quality and targeted services and products across the spectrum of its products. The CFU business development function defines, models, and coordinates strategic scenarios as they may relate to future activity in the competitive marketplace. One such scenario starting in 2019 is the Motorola and advanced video conversion project, which will occur over multiple years in the Communications Utility. The Communication Sales department is responsible for direct sales and customer support of CFU’s cable TV and data services. Communications Services Specialists field the majority of residential customer inquiries for our FiberNet TV, phone and internet products, including product offering questions and billing. This department is also responsible for the sales of business‐class communication services. Business‐class services include fiber‐based internet or point‐to‐point products, commercial TV products, business phone, and wholesale transactions with other municipal communication providers. This department also includes the Communications Help Desk, providing phone support seven days a week for customers who may be experiencing TV, internet or phone problems. They have had a large turnover this year with many students graduating and leaving CFU to take permanent full time jobs elsewhere. The addition of the one full time help desk position helped stabilize the department during this time and allowed us to continue the excellent service we provide. As we move forward with the Advanced Video and Calix equipment conversion, the

72


Personnel Summary

Help Desk will be critical to customer satisfaction and support during this time. Additional hours are planned to cover the conversion over the next few years.

Employee and Legal Services (ELS) Business Unit The Employee and Legal Services business unit provides the legal and personnel development necessary for CFU’s ongoing success in support of CFU’s Vision. The Director of Employee and Legal Services serves as the General Counsel of CFU for the daily activities and contracts. In addition to providing legal counsel for the CFU organization, the human resources and employee development area is charged with the responsibility of providing innovative, high‐quality administration, coordination, and promotion of CFU’s benefits, insurance, job search, service recognition, compensation, and employee development programs. The Health and Safety Coordinator is responsible for establishing an accident prevention and safety program leading to zero employee accidents and identifying safety measures and training to achieve a safe environment for CFU’s customers and employees

Director of Customer Service & Business Development

Energy Services Manager Energy Services Engineer

Energy Services Specialist

Student Intern

Marketing Manager Marketing Specialist

Communications Sales Manager Help Desk Supervisor Help Desk Specialist (2)

Help Desk Assistant (9)

Lead Comm. Svcs. Specialist

Communications Services Specialist (2)

Customer Service Manager Customer Service Supervisor Receptionist

PT Customer Service Assistant

Customer Service Assistant (2)

Lead Customer Service Specialist

Customer Service Specialist (4)

Customer Service Analyst

Billing Systems Assistant

Lead Credit Services Specialist

Credit Services Specialist

Director of Employee & Legal Services

Human Resources Manager Compensation & Benefits Specialist

Employee Services Specialist

Health & Safety Coordinator

Administrative Assistant

73


Personnel Summary

Electric, Gas & Water Operations (OPS) Business Unit The Electric, Gas & Water Operations organization, through its six departments, provides the products and services using the guidelines within the CFU Mission Vision Statements and the initiatives outlined in Strategic Plan. The Director of Operations functions as the Chief Operations Officer. The Electric Production department is responsible for providing the competitive electric energy supply required to meet the needs for CFU’s customers. Functions include operation and maintenance of CFU’s generating facilities, dispatching of generation resources and wholesale power transactions, energy resource procurement, monitoring CFU’s interest in jointly‐owned facilities, load forecasting, energy forecasting‐sales/purchases and strategic analysis for future generation requirements that meet CFU environmental goals and State or Federal Renewable Portfolio Standards. The Electric Distribution department is responsible for services that include the planning, design, construction and maintenance of the transmission and distribution systems of the Electric Utility. The Electric Operations department provides engineering and planning services to the CFU organization in support of major projects and health and safety services affecting electric, gas, and water and communications utilities. Functions include planning, standards, project management, SCADA, GIS, design, mapping and drafting, electric metering, NERC compliance and operation of CFU’s transmission and distribution system for the Electric Utility. In addition, there is shared responsibility for cyber security of SCADA and other key systems. The Gas & Water Operations department provides competitive, dependable natural gas and water to CFU’s customers. Gas operations include the purchase and safe distribution of natural gas. Water operations include the pumping, treatment, testing, and delivery of high quality water meeting all federal and state regulations. The department also provides the gas and water metering, engineering, planning and design for the Gas and Water Utilities. The Gas & Water Construction department is responsible for construction and maintenance of the Gas and Water Utilities. Gas service provides customers with a wide variety of in‐home services, some of which include leak investigation and mitigation, annual furnace inspection, carbon monoxide investigation, and new piping inspection. Transportation Services is responsible for providing maintenance and upkeep of all CFU vehicles and equipment. This includes coordinating the use of the CFU fleet and assisting in filing insurance claims for vehicles and equipment.

74


Personnel Summary

Director of Electric, Gas, & Water Operations

Administrative Assistant

Principal Transmission Engineer

Electric Substation & Metering Manager CAD Technician I

ROW & GIS Specialist

CAD Technician Part Time

Compliance Specialist

Distribution System Engineer II

Electrical Engineering Technician

Senior Electric Meter Technician

Transportation Services Supervisor Part Time Vehicle Washer

Garage Technician (2)

Electric Distribution Manager Electric Services Specialist

Office Assistant Part Time

Senior Electric Distribution Planner

Electric Distribution Planner (2)

Electric Construction & Line Supervisor (2) Line Crew Leader (3)

Electric Line Worker (9)

Gas & Water Operations Manager Gas & Water Engineer

Senior Gas & Water Distribution Planner

Gas & Water Distribution Planner

Gas Commodity & Project Administrator

Senior Gas Distribution Specialist

Gas & Water Administrative Specialist

Water Supervisor Water Systems Specialist

Water Systems Operator

Gas & Water Construction Manager Gas & Water Administrative Specialist

Gas Service Technicians (5)

Gas & Water Construction Supervisor Systems Technician

Water & Gas Crew Leader (2)

Construction Specialist II (6)

Construction Specialist I (2)

Electric Production Manager Environmental Compliance Coordinator

Power Plant Administrative Specialist

Power Plant Maintenance Supervisor Instrument & Control Technician (2)

Power Plant Electrician

Maintenance Mechanic (4)

Control Room Operator Supervisor Control Room Operator (4)

Assistant Control Room Operator (5)

Relief Control Room Operator (2)

75


Personnel Summary

Communications Services (CS) Business Unit The Communications Services organization, through its three departments, provides the product and services using the guidelines within the CFU Mission Vision Statements and the initiatives outlined in the Strategic Plan. The Director of this business unit functions as the Chief Technology Officer. Communications Operations provides communications and technology applications for CFU. Its main functions include the engineering, planning, design and operations and maintenance of the Communications Utility transmission and distribution systems. The Information Systems (IS) department provides development and maintenance of computer networks, intranet computer operational support and other value added platforms. IS also provides support for engineering, operations, payroll and HR, customer service and financial services systems and end‐user computer needs. Cyber security of the internal CFU systems is vested in this department which works with all business units to achieve company‐wide security. The Meter Reading department provides for timely and accurate meter reading services to customers for billing purposes.

Director of Communications Services

Network Engineering Supervisor Network Engineer II (2)

Network Engineer I (2)

IS & Meter Reading Manager Meter Reading Supervisor Meter Reader (4)

Network & Security Supervisor Systems Administrator II

Systems Administrator I

IT Support Technician

Web Services Administrator

Database & Applications Adminstrator

Application Support Specialist (2)

Business System Project Coordinator

Billing System Analyst

Billing System Specialist

Communications Svcs Manager Communications Supervisor Communications Technician II

Lead Communications Technicians (2)

Communications Technician (4)

Communications Installer (3)

Temp Communications Installer (1)

Communications Planner

Headend Communications Technician

Communications Administrative Specialist

Provisioner

76


Personnel Summary

Finance and Organizational Services (FOS) Business Unit The Finance and Organizational Services business unit consists of three departments and provides the business assessments and measures for the business platform to succeed in addition to providing corporate services for CFU. The Director of this business unit functions as the Chief Financial Officer and Board Treasurer. The Finance department provides service in financial reporting, budgeting, analysis, rate development and monitoring, and accounting management of CFU physical and financial assets. The department also provides the basis for development of the business assessment and measurement tools necessary for the CFU organization’s ongoing success. The General Purchasing and Facilities department provides innovative, high‐quality service to the CFU organization for the ongoing maintenance of all CFU buildings and grounds, and facilitates planning for the efficient use of these facilities. In addition, this department provides for the procurement of goods and services for CFU for general operations. The Inventory Purchasing and Warehousing department is charged with providing innovative, high‐quality management and control of the inventory procurement processes and management of CFU inventory assets, warehouses and storage.

Director of Finance & Organizational Services

Finance & Rates Coordinator

Internal Audit Specialist

Finance Manager Cashier

Finance Specialist (2)

Senior Finance Specialist (2)

Inventory Purchasing & Warehouse Manager Warehouse Supervisor Warehouse Worker (2)

Purchasing & Energy Svcs Assistant

General Purchasing & Facilities Manager General Purchasing & Facilities Specialist

Lead Property Maintenance Worker

Property Maintenance Worker

PT Laborer

77

FYI -- LEAVE BLANK ROW FOR PRINT FORMATTING!!! CEDAR FALLS UTILITIES CAPITAL IMPROVEMENT PLAN

Item2017

Actual2018

Actual2019

Published2019

Reforecast2020 2021 2022 2023 2024 TOTALS

ELECTRIC UTILITY

Electric Production 2,215,345 1,690,729 1,581,000 2,101,200 2,468,000$ 1,190,000$ 1,353,000$ 992,000$ 1,641,000$ 7,644,000$

Electric Transmission 2,875,703 219,138 211,000 100,500 222,000 225,000 227,000 230,000 401,000 1,305,000

Electric Distribution 3,351,550 2,574,273 3,900,000 4,039,900 5,072,000 4,180,000 3,229,000 3,335,000 5,586,000 21,402,000

General Plant And Vehicles 2,730,399 3,936,965 2,754,200 2,788,786 2,712,210 1,602,980 2,336,770 2,662,660 3,249,640 12,564,260

TOTALS 11,172,998$ 8,421,104$ 8,446,200$ 9,030,386$ 10,474,210$ 7,197,980$ 7,145,770$ 7,219,660$ 10,877,640$ 42,915,260$

GAS UTILITY

Gas 987,596$ 731,058$ 1,584,000$ 1,271,100$ 1,163,000$ 1,067,000$ 905,000$ 936,000$ 969,000$ 5,040,000$

General Plant 281,985 583,981 130,880 170,329 243,540 111,820 129,390 65,830 69,250 619,830

TOTALS 1,269,581$ 1,315,039$ 1,714,880$ 1,441,429$ 1,406,540$ 1,178,820$ 1,034,390$ 1,001,830$ 1,038,250$ 5,659,830$

WATER UTILITY

Water 1,651,838$ 2,663,116$ 2,333,000$ 2,485,900$ 2,340,000$ 2,172,000$ 1,825,000$ 1,889,000$ 2,344,000$ 10,570,000$

General Plant 210,318 406,085 96,730 122,234 174,090 81,470 93,690 50,180 53,000 452,430

TOTALS 1,862,156$ 3,069,201$ 2,429,730$ 2,608,134$ 2,514,090$ 2,253,470$ 1,918,690$ 1,939,180$ 2,397,000$ 11,022,430$

COMMUNICATIONS UTILITY

Communications 2,478,559$ 2,622,486$ 4,565,000$ 3,186,500$ 3,843,000$ 5,179,000$ 5,531,000$ 5,447,000$ 2,031,000$ 22,031,000$

General Plant 56,890 14,712 293,190 320,751 35,160 77,730 15,150 156,330 328,110 612,480

TOTALS 2,535,449$ 2,637,198$ 4,858,190$ 3,507,251$ 3,878,160$ 5,256,730$ 5,546,150$ 5,603,330$ 2,359,110$ 22,643,480$

TOTAL UTILITY PLANT 13,560,591$ 10,500,799$ 14,174,000$ 13,185,100$ 15,108,000$ 14,013,000$ 13,070,000$ 12,829,000$ 12,972,000$ 67,992,000$

TOTAL GENERAL PLANT 3,279,592$ 4,941,743$ 3,275,000$ 3,402,100$ 3,165,000$ 1,874,000$ 2,575,000$ 2,935,000$ 3,700,000$ 14,249,000$

TOTAL CIP PLAN 16,840,184$ 15,442,542$ 17,449,000$ 16,587,200$ 18,273,000$ 15,887,000$ 15,645,000$ 15,764,000$ 16,672,000$ 82,241,000$

SUMMARY BY UTILITY (INCLUDING INFLATION)

80

CAPITAL BUDGET REQUEST FY 2020CIP BUDGET ITEM SUMMARYELECTRIC PRODUCTION

BudgetItem

Project Title or Asset Name2017

Actual2018

Actual

Current Year

Published

Current Year

Reforecast2020 2021 2022 2023 2024

2020-2024TOTAL

102 WS #4 Generation (CFU Share 2.14%) 221,412 69,611 127,000 177,700 254,000 305,000 127,000 162,000 431,000 1,279,000

103 WS #3 Generation (CFU Share 3.1%) 519,744 832,612 254,000 634,500 964,000 203,000 812,000 254,000 254,000 2,487,000

104 Neal #4 Generation (CFU Share 2.5%) 100,319 177,716 406,000 439,600 406,000 203,000 152,000 305,000 675,000 1,741,000

112 Streeter Station Upgrades 74,669 176,075 264,000 496,500 232,000 240,000 249,000 257,000 267,000 1,245,000

114 Combustion Turbine Upgrades 3,045 159,000 107,400 51,000 13,000 13,000 14,000 14,000 105,000

115 Unit #6 Turbine Inspection - - - 129,000 - - - 129,000

119 Streeter Station Environmental 55,826 (118,168) 94,000 - - 97,000 - - - 97,000

130 Gas Turbines and Streeter Station Fire Protection 159,000 162,800 187,000 - - - - 187,000

138 Power Plant DCS Replacement 1,240,330 552,883 - 82,700 249,000 - - - - 249,000

139 Unit #7 Turbine Inspection 118,000 - 125,000 - - - - 125,000

Current Year CIP Budget 2,215,345 1,690,729 1,581,000 2,101,200 2,468,000 1,190,000 1,353,000 992,000 1,641,000 7,644,000

Prior Year CIP Budget - As Amended 1,581,000 1,060,000 1,047,000 1,361,000 865,000 1,311,000 5,644,000

Current Year (over) under Prior Year (520,200) (1,408,000) (143,000) 8,000 (127,000) (330,000) (2,000,000)

81

CEDAR FALLS UTILITIES CAPITAL IMPROVEMENTS PLAN (CIP)

ELECTRIC PRODUCTION – 2020

Budget Item 102: Walter J. Scott Jr. Energy Center Unit 4 (WS4) Production - $254,000 CFU was originally a 2.02% shareholder in WS4. After purchasing 0.96 MW from Pella’s share in 2011, CFU now has a 2.14% share (16 MW). WS4 began commercial operations in June 2007 and is the first new coal fired utility electric generator built in Iowa since 1977. This 750 MW unit has a super-critical high-pressure boiler and turbine generator and obtains maximum efficiency and lower emissions to the environment. This budget item is for production related capital additions required to continue efficient and environmentally conscious operation of the unit. As an owner of the generating unit, CFU is contractually required to contribute 2.14% of the annual capital additions to maintain the plant. Budget Item 103: Walter J. Scott Jr. Energy Center Unit 3 (WS3) Production - $964,000 The 3.1% CFU ownership (21 MW) in WS3 provides CFU with an economical base load source of electricity. This budget item is for production related capital additions required to continue efficient and environmentally conscious operation of the unit. As an owner of the generating unit, CFU is contractually required to contribute 3.1% of the annual capital additions to maintain the plant. Budget Item 104: George A. Neal Generating Station Unit 4 (Neal 4) Production - $406,000 The 2.5% CFU ownership (16 MW) in Neal Unit 4 provides CFU with an economical base load source of electricity. This budget item is for production related capital additions required to continue efficient and environmentally conscious operation of the unit. As an owner of the generating unit, CFU is contractually required to contribute 2.5% of the annual capital additions to maintain the plant.

Budget Item 112: Streeter Station Upgrades - $232,000 This budget item reflects the cost of upgrades to Streeter Generating Station. Upgrades include replacement of cooling tower drift eliminator and stack repairs. Budget Item 114: Combustion Turbine Upgrades - $51,000 This budget item reflects the cost of upgrades to the Gas Turbines. Upgrades include new voltage regulators and setting up GT2 to burn fuel oil. Budget Item 130: Gas Turbines and Streeter Station Fire Protection - $187,000 This budget item provides for the fire protection of the gas turbines & Streeter Station. An audit performed by loss prevention specialists determined that fire protection equipment should be installed. The upgrade will be for a fire detection and suppression system for Streeter Station, gas turbines and cooling tower. This upgrade is very important in the direct cost associated with insuring CFU property.

82


ELECTRIC PRODUCTION – 2020

Budget Item 138: Power Plant DCS - $249,000 This budget item provides for the implementation and upgrading of the distributed control system (DCS). The DCS is a hierarchy of controllers connected by communications networks for controlling and monitoring the Streeter Station and Gas Turbine generating units. Planned costs are to install Windows 10 operating system and an ABB software upgrade. Budget Item 139: Unit #7 Turbine Inspection - $125,000 This budget item provides for the inspection of Unit #7 turbine. Routine inspections are needed to ensure reliability. Items in this budget would include any potential turbine blading repair.

83

CAPITAL BUDGET REQUEST FY 2020CIP BUDGET ITEM SUMMARYELECTRIC TRANSMISSION

Budget Item

NumberProject Title or Asset Name

2017Actual

2018Actual

Current Year

Published

Current Year

Reforecast2020 2021 2022 2023 2024

2020-2024TOTAL

140 University Ave Substation 685,817

141 University Ave 69kV Trans Line 1,744,945

142 New Transmission Line MVP (85,356)

151 Network Transmission Upgrades 207,096 272,828 58,000 94,800 69,000 72,000 74,000 77,000 80,000 372,000

153 HWY 58 Corridor Improvements - TRANSMISSION - TIF - - - - - - 168,000 168,000

192 WS #4 Transmission (CFU Share 2.140%) 109,638 4,790 51,000 4,100 51,000 51,000 51,000 51,000 51,000 255,000

193 WS #3 Transmission (CFU Share 3.1%) 64,064 19,418 51,000 800 51,000 51,000 51,000 51,000 51,000 255,000

194 Neal #4 Transmission (CFU Share 2.5%) 64,143 7,459 51,000 800 51,000 51,000 51,000 51,000 51,000 255,000

Current Year CIP Budget 2,875,703 219,138 211,000 100,500 222,000 225,000 227,000 230,000 401,000 1,305,000

Prior Year CIP Budget - As Amended 211,000 194,000 195,000 196,000 198,000 374,000 1,157,000

Current Year (over) under Prior Year 110,500 (28,000) (30,000) (31,000) (32,000) (27,000) (148,000)

84


ELECTRIC TRANSMISSION – 2020

Budget Item 151: Network Transmission Upgrades - $69,000 This budget item provides for the upgrades on network transmission equipment, which includes both 69kV and 161kV systems equipment. Budget Item 192: Walter J. Scott Jr. Energy Center Unit 4 (WS4) Transmission - $51,000 CFU was originally a 2.02% shareholder in WS4. After purchasing 0.96 MW from Pella’s share in 2011, CFU now has a 2.14% share (16 MW). WS4 began commercial operations in June 2007 and is the first new coal fired utility electric generator built in Iowa since 1977. This budget item is for capital improvements to transmission built for WS4. As an owner of the unit, CFU is contractually required to contribute 2.14% of the annual capital additions. Budget Item 193: Walter J. Scott Jr. Energy Center Unit 3 (WS3) Transmission - $51,000 The 3.1% CFU ownership (21 MW) in WS3 provides CFU with an economical base load source of electricity. This budget item is for capital improvements to transmission built for WS3. As an owner of the unit, CFU is contractually required to contribute 3.1% of the annual capital additions.

Budget Item 194: George A. Neal Generating Station Unit 4 (Neal 4) Transmission - $51,000 The 2.5% CFU ownership (16 MW) in Neal Unit 4 provides CFU with an economical base load source of electricity. This budget item is for capital additions required to continue operation of Neal 4 transmission and Lehigh-Webster transmission lines. As an owner of the unit, CFU is contractually required to contribute 2.5% of the annual capital additions.

85

CAPITAL BUDGET REQUEST FY 2020CIP BUDGET ITEM SUMMARYELECTRIC DISTRIBUTION

Budget Item


Actual2018

Actual

Current Year

Published

Current YearReforecast

2020 2021 2022 2023 20242020-2024

TOTAL

111 SCADA System Upgrades 84,555 2,744 64,000 18,600 93,000 91,000 14,000 15,000 40,000 253,000

144 Distribution Substation Upgrades 84,542 99,097 75,000 71,000 85,000 278,000 317,000 290,000 79,000 1,049,000

150 12 kV Protective Relay Replacement 5,913 - - - - 32,000 - - 32,000

153 HWY 58 Corridor Improvements - TIF 6,122 58,067

160 Union Sub - 2nd Dist Transformer - 90,400 1,450,000 426,000 - - - 1,876,000

161 Viking Road Substation - Distribution - - - - - - 1,959,000 1,959,000

201 UG Extensions - TIF 44,373 307,000 242,200 33,000 34,000 35,000 36,000 38,000 176,000

204 UG Cable Replacement 162,271 151,713 218,000 162,200 171,000 265,000 225,000 233,000 241,000 1,135,000

206 UG Electric Facilities - New Residential 313,648 12,672 240,000 177,400 308,000 319,000 330,000 342,000 354,000 1,653,000

210 OH Line Ext, Upgrades and Removals 457,431 327,456 290,000 246,400 252,000 144,000 149,000 154,000 160,000 859,000

213 HWY 58 Corridor Improvements - TIF 29,944 295,863 32,000 - - - - - - -

305 UG Line Extensions 347,769 324,615 349,000 348,600 357,000 776,000 275,000 285,000 1,119,000 2,812,000

306 OH to UG Conversions 473,560 336,580 811,000 552,500 804,000 588,000 608,000 541,000 233,000 2,774,000

320 Underground Services 236,115 231,878 231,000 231,000 229,000 237,000 245,000 254,000 263,000 1,228,000

360 New Distribution Transformers 377,769 347,581 432,000 431,600 429,000 444,000 460,000 476,000 492,000 2,301,000

370 New Electric Meters 148,291 181,989 119,000 172,800 210,000 217,000 225,000 233,000 241,000 1,126,000

381 Street Light Facilities 492,072 97,424 674,000 1,237,700 609,000 317,000 269,000 339,000 351,000 1,885,000

390 Security Lighting 53,324 46,040 38,000 38,000 42,000 44,000 45,000 15,000 16,000 162,000

391 Radio Tower Equipment Upgrades 33,852 60,554 20,000 19,500 - - - 122,000 - 122,000

Current Year CIP Budget 3,351,550 2,574,273 3,900,000 4,039,900 5,072,000 4,180,000 3,229,000 3,335,000 5,586,000 21,402,000

Prior Year CIP Budget - As Amended 3,900,000 4,478,000 4,437,000 2,746,000 4,243,000 3,806,000 19,710,000

Current Year (over) under Prior Year (139,900) (630,000) 226,000 (509,000) 881,000 (1,814,000) (1,846,000)

86


ELECTRIC DISTRIBUTION – 2020

Budget Item 111: Status Control and Data Acquisition System Upgrades (SCADA) - $93,000 This budget item include purchasing SCADA server hardware. Budget Item 144: Substation Upgrades - $85,000 This budget item reflects the cost of upgrades to various substations as needed throughout the year. This includes capacitors, regulators, re-closers, relays, batteries and other equipment for the substations. Schedule includes replacing meters at UNI, Deere, Target substations and Solar Garden. Budget Item 160: Union Substation 2nd Distribution Transformer - $1,450,000 This budget item is for the additional distribution transformer and Union Substation. This transformer will be served off the 161kV bus to provide reliability.

Budget Item 201: Underground Extensions – TIF - $33,000 This budget item is for the construction of electric facilities to serve new areas in the TIF districts, including installation of main feeder line and upgrading of facilities due to improvements in the TIF areas.

Budget Item 204: Underground Cable Replacement - $171,000 This budget item reflects the cost of replacing underground facilities in areas that have faulted several times. Areas include Viking Hills along with other replacements as needed. Budget Item 206: Underground Electric Facilities for New Residential - $308,000 This budget item provides funding for installation of underground electric facilities to residential lots in new developments. Anticipated additions include The Arbors 4th Addition, Panther West, Greenhill Village, West Village Prairie Addition and Western Home addition. Budget Item 210: Overhead Line Extension, Upgrades and Removals - $252,000 This budget item provides for overhead line extensions to serve new customers as well as installation and removal of poles and overhead line equipment associated with upgrades and replacements. Budget Item 305: Underground Line Extensions - $357,000 This budget item reflects the cost of installing underground facilities to industrial, commercial, rural, and residential customers requiring electric service. It does not include projects in the TIF areas but does include laterals to feed customers in these areas. Planned expansions include Cedar Falls High School and a Western Home expansion.

Budget Item 306: Overhead to Underground Conversions - $804,000 This budget reflects the cost of replacing old overhead electric lines with new underground lines in order to provide our customers with a more reliable system that requires less maintenance. Planned areas include 1st St, 13th and Main St.

87


ELECTRIC DISTRIBUTION – 2020

Budget Item 320: Underground Services - $229,000 This budget item provides for the installation of underground services to residential customers. Costs include installing approximately 150 new underground services and 75 replacements services. Budget Item 360: New Distribution Transformers - $429,000 This budget item provides funding for the purchase, first-time installation and permanent retirement of transformers. Areas requiring transformers are new residential developments and new commercial and industrial buildings. Budget Item 370: New Electric Meters - $210,000 This budget item provides for the purchase of AMI electric meters, first-time installation and instrument transformers for new customers or failed units. This includes 1,000 new and replacement meters. Budget Item 381: Street Light Facilities - $609,000 This budget item reflects the cost of installing new streetlights in residential developments and other areas of the city as approved by the city engineer. It also includes the replacement of aging streetlights and street light circuits throughout the city. Plans are to install decorative lighting on Second and Third St. Budget Item 390: Security Lighting - $42,000 This budget item provides for the replacement, installation and conversion of rental lights. Approximately 25 new rental lights and the conversion of 100W HPS and 175W Mercury Vapor lights to LED are planned.

88

CAPITAL BUDGET REQUEST FY 2020CIP BUDGET ITEM SUMMARYGAS OPERATIONS

Budget Item


Actual2018

ActualCurrent Year

PublishedCurrent YearReforecast

2020 2021 2022 2023 20242020-2024

TOTAL

480 New Gas Service 182,387 188,478 176,000 152,600 209,000 203,000 210,000 217,000 225,000 1,064,000

498 Gas Main Relocate, Replace and Abandon 264,183 167,364 239,000 419,600 229,000 79,000 82,000 85,000 88,000 563,000

501 Gas Main Installation and Changes - TIF 43,430 123,265 169,000 200 - - - - - -

530 Gas Main Extensions 218,247 46,503 474,000 387,200 228,000 366,000 178,000 184,000 190,000 1,146,000

540 Gas Services Relocate, Replace and Abandon 69,128 63,385 230,000 142,100 172,000 90,000 93,000 97,000 100,000 552,000

550 Cathodic Protection 2,075 1,977 12,000 3,000 13,000 7,000 7,000 7,000 8,000 42,000

560 New Gas Meters 179,237 121,767 229,000 130,900 252,000 260,000 270,000 279,000 289,000 1,350,000

570 New Gas Regulators 28,909 18,319 55,000 35,500 60,000 62,000 65,000 67,000 69,000 323,000

Current Year CIP Budget 987,596 731,058 1,584,000 1,271,100 1,163,000 1,067,000 905,000 936,000 969,000 5,040,000

Prior Year CIP Budget - As Amended 1,584,000 905,000 774,000 766,000 826,000 819,000 4,090,000

Current Year (over) under Prior Year 312,900 (258,000) (293,000) (139,000) (110,000) (150,000) (950,000)

89


GAS UTILITY – 2020

Budget Item 480: New Gas Service - $209,000 This budget item provides for the installation of approximately 145 new gas services throughout the distribution system. Budget Item 498: Gas Main Relocate, Replace and Abandon - $229,000 This budget item covers the cost of relocation, replacement and abandonment of gas mains. Projects include city street reconstruction, street restoration, drain tile installation and sanitary and storm sewer repairs or replacements. Gas main replacements include roundabout at Greenhill and Cedar Heights, Madison St from Valley Park to Waterloo Rd., 2nd and 3rd St. alleys. Budget Item 530: Gas Main Extensions - $228,000 This budget item includes gas main extensions requested by customers or developers of new subdivisions and areas presently not served by the gas distribution system. Potential developments include The Arbors, Prairie West, Wild Horse Ridge, West Fork and Cedar Falls High School. Budget Item 540: Gas Service Relocate, Replace and Abandon - $172,000 This budget item is for the relocation, replacement or abandonment of existing services required by customer requests, street reconstruction, sanitary and storm sewer construction, or other related activities. Potential areas include Madison St. between Valley Park and Waterloo Rd. Budget Item 550: Cathodic Protection - $13,000 This budget item provides for the installation of approximately 15 anodes and 2 insulation points. Installations include steel mains, services, and tracer wire locations. Budget Item 560: New Gas Meters - $252,000 This budget item provides for gas meters for system expansion or meter replacement. 320 Advanced Metering Infrastructure (AMI) meters for new residential customers include electronic radio transmitter (ERT’s). The balance of new meters are compatible with the AMI system but require ERT attachments in the future. Budget Item 570: New Gas Regulators - $60,000 This budget item covers the purchase of natural gas regulators for system expansion and meter replacement.

90

CAPITAL BUDGET REQUEST FY 2020CIP BUDGET ITEM SUMMARYWATER OPERATIONS

Budget Item


2017Actual

2018Actual

Current Year

Published

Current Year

Reforecast2020 2021 2022 2023 2024

2020-2024TOTAL

601 Water TIF Improvements 92,931 658,278 24,000 80,200 332,000 - - - - 332,000

630 Water Main Extensions 222,386 139,183 34,000 78,100 40,000 47,000 49,000 50,000 52,000 238,000

640 Water Tower Coating System Replacement 7,117 643,213 - 1,800 - 409,000 - - 389,000 798,000

647 Well House Improvements 5,401 9,894 28,000 56,400 38,000 29,000 30,000 31,000 33,000 161,000

655 Water Main Relocate, Replace and Abandon 1,182,023 1,060,703 1,951,000 2,038,100 1,630,000 1,376,000 1,424,000 1,474,000 1,525,000 7,429,000

680 New Water Meters 107,340 97,416 193,000 154,200 195,000 202,000 209,000 217,000 224,000 1,047,000

690 Hydrants - New Installs and Replacements 34,641 54,429 103,000 77,100 105,000 109,000 113,000 117,000 121,000 565,000



Current Year (over) under Prior Year (152,900) (663,000) 61,000 49,000 (453,000) (24,000) (1,030,000)

91


WATER UTILITY – 2020

Budget Item 601: Water TIF Improvements - $332,000 This budget item provides for the installation & upgrading of water facilities to serve TIF districts. The budget includes replacement of water mains along Cedar Heights Drive from Greenhill to Viking and new main installation from Huntington to Viking (Pinnacle Prairie). Budget Item 630: Water Main Extensions - $40,000 This budget item provides for water main extensions to areas that are not currently served by the distribution system. Developers are responsible for the cost of the water extension. CFU inspects the water system installation. Potential extensions include Union Rd. Budget Item 647: Well House Improvements - $38,000 This budget item is for various well house and water treatment improvements. The budget includes roof replacements and additional water quality sampling equipment for distribution system coverage. Budget Item 655: Water Main Relocate, Replace and Abandon - $1,630,000 This budget item provides for water system improvements including the relocation and abandonment of existing water mains and water valve replacements required in connection with the City of Cedar Falls’ street or sewer projects. Projects include Madison St, Lilac Lane, W. 12th St, Washington St, Idaho Rd, W. 2nd, W. 3rd and intersection at Greenhill and Cedar Heights. Budget Item 680: New Water Meters - $195,000 This budget item covers the cost of water meter replacements and installations to new customers. Advanced Metering Infrastructure (AMI) meters for new residential customers include electronic radio transmitter (ERT’s). Some existing meters are compatible with the AMI system but require ERT attachments in the future. Budget Item 690: Hydrants – New Installs and Replacements - $105,000 This budget item covers the cost of installation and relocation or replacement of approximately 16 hydrants. These improvements are generally done in connection with other construction projects, replacement of damaged hydrants and replacement of the old style Mathews hydrants.

92

CAPITAL BUDGET REQUEST FY 2020CIP BUDGET ITEM SUMMARYCOMMUNICATIONS OPERATIONS

Budget Item


2017Actual

2018Actual

Current Year

Published

Current YearReforecast

2020 2021 2022 2023 20242020-2024

TOTAL

703 Special Telecommunications Services (STS) 18,848 28,985 12,000 19,500 12,000 12,000 13,000 13,000 14,000 64,000

801 Optical Network & Line Terminals ONTs and OLTs 643,134 734,207 1,539,000 521,100 1,676,000 2,926,000 3,079,000 3,614,000 624,000 11,919,000

804 Internet Protocol Television (IPTV) & TV Everywhere - 949,000 920,800 85,000 132,000 136,000 118,000 122,000 593,000

805 Digital Set-Top Boxes 202,276 232,689 383,000 187,300 687,000 1,152,000 875,000 390,000 305,000 3,409,000

806 Headend Data Equipment 406,347 781,701 126,000 122,800 159,000 165,000 227,000 235,000 244,000 1,030,000

807 Ad Insertion Equipment - - 8,000 - 106,000 - - - - 106,000

820 Customer Service drops for CATV and Data 279,765 193,205 154,000 148,500 133,000 138,000 143,000 148,000 153,000 715,000

828 28E Jointly Owned IPTV Assets (CFU ownership) 35,297 199,411 110,000 106,100 34,000 52,000 363,000 25,000 26,000 500,000

851 Industrial Parks Improvements - Unified HWY 58 12,605 117,256 638,000 638,000 9,000 10,000 10,000 10,000 11,000 50,000

852 Overhead to Underground Conversions 74,522 71,169 117,000 78,400 80,000 50,000 51,000 53,000 55,000 289,000

854 FTTP infrastructure for New Developments 237,247 43,988 170,000 78,500 164,000 169,000 175,000 181,000 188,000 877,000

856 New Rural Broad Band (Non-Grant) 60,172 86,082 88,000 85,200 366,000 54,000 63,000 52,000 54,000 589,000

858 Special Telecom Build-Out (Outside City Limits) 228,339 57,272 36,000 35,100 36,000 37,000 38,000 40,000 41,000 192,000

860 Headend Video Transmission Equipment 234,834 51,234 60,000 166,600 167,000 63,000 65,000 - - 295,000

861 Video On Demand 38,858 - 24,000 30,700 - - - - - -

862 Wireless Internet Access Points 6,160 17,686 26,000 25,700 29,000 30,000 31,000 32,000 33,000 155,000

864 Phone Equipment - 11,000 3,100 11,000 11,000 11,000 12,000 12,000 57,000

865 Managed Wireless Routers 157 7,600 114,000 19,100 89,000 178,000 251,000 524,000 149,000 1,191,000



Current Year (over) under Prior Year 1,378,500 691,000 1,115,000 433,000 (3,810,000) 282,000 (1,289,000)

93


COMMUNICATIONS UTILITY – 2020

Budget Item 703: Special Telecommunications Services (STS) - $12,000 This budget item covers installing special fiber services for businesses such as gigabyte internet connection, wholesale internet bandwidth, point-to-point, dark fiber, and looped fiber connections. Budget Item 801: Optical Network and Line Terminals ONT and OLT - $1,676,000 This budget item is for optical network terminals (ONTs) used at houses, businesses, or apartments. Motorola ONT’s will not support the new Video IPTV system and will be replaced accordingly. Optical line terminals (OLTs) are installed at each fiber hut and will serve up to 2,500 customers. Budget Item 804: Internet Protocol TV (IPTV) & TV Everywhere - 85,000 This budget item is for the 100% owned share of the IPTV infrastructure. Spending is for additional licensing and storage. Budget Item 805: Digital Set-Top Boxes - $687,000 This budget item allows for the purchase of Digital Set-Tops and Digital Video Recorders used to view cable TV channels, high definition channels and video on demand. Replacing set top boxes will be in conjunction with the Motorola replacement project. Budget Item 806: Headend Data Equipment - $159,000 This budget item includes replacement and upgrade of servers, routers and switches that are necessary to maintain the growth and stability of the communications data network. Budget Item 807: Ad Insertion Equipment - $106,000 This budget item is for upgrades to equipment needed for adding channels and servers. Budget Item 820: Customer Service drops for CATV and Data - $133,000 This budget item provides for installing service drops to connect new customers to CFU’s broadband network as well as reconnecting existing customers. The material required to provide these services includes conduit and fiber. However, the cost of the ONTs is reflected in budget item 801. Many of these connections are in new subdivisions. Budget Item 828: 28E Jointly Owned IPTV Assets - $34,000 This budget item is for the jointly owned IPTV assets, the budget item only includes it’s share of the ownership.

Budget Item 851: Industrial Park Improvements – Unified Hwy 58 - $9,000 This budget item provides funding for additions, replacements and improvements for the fiber network in the TIF area.

94


COMMUNICATIONS UTILITY – 2020

Budget Item 852: Overhead to Underground Conversions - $80,000 The Communication Utility is converting fiber and conduit from an overhead to underground system in conjunction with the Electric Utility conversions. Areas planned for conversion are 1st St, 13th St and Main St.

Budget Item 854: New Fiber-to-the-Premise infrastructure for new developments - $164,000 This budget item enables CFU to provide fiber to new subdivisions, retail and business areas. Projects include Greenhill Village Townhouses, West Village, Arbors, Panther West, Pheasant Hollow and a Western Home expansion. Budget Item 856: Rural Broad Band (Fiber or Wireless) - $366,000 This budget covers completing fiber and wireless (Broadband) network improvements in rural areas. Extending fiber to rural towers and Waverly Rd are also included. Budget Item 858: Special Telecom Build-Out (Outside City Limits) - $36,000 This budget item covers infrastructure projects outside Cedar Falls and Rural Broadband area boundaries. The Cedar Falls portion of the construction is reflected in budget item 703. Budget Item 860: Headend and Transmission System Equipment - $167,000 This budget item is for enhancements and replacements to the Headend and Hut video transmission equipment. Budget Item 862: Wireless Internet Access Points - $29,000 This budget item expands the wireless infrastructure footprint and is a value added service for WiFi access at various points in Cedar Falls. Budget Item 864: Phone Equipment - $11,000 This budget item includes equipment required for delivery of phone service. Budget Item 865: Managed Wireless Routers - $89,000 This budget item is for wireless routers. CFU provides customer premise routers that are manageable and supported by CFU.

95

CAPITAL BUDGET REQUEST FY 2020CIP BUDGET ITEM SUMMARYGENERAL PLANT - TECHNOLOGY

Budget Item


2017Actual

2018Actual

Current Year

Published

Current Year

Reforecast2020 2021 2022 2023 2024

2020-2024TOTAL

905 Meter Redading System Upgrade 3,019 -

906 Enterprise Systems Software (All Depts) 180,401 3,950 517,000 353,100 522,000 33,000 147,000 379,000 1,274,000 2,355,000

910 Shared Computer System Infrastructure 304,696 - 823,000 922,200 42,000 191,000 - 426,000 942,000 1,601,000

911 General Computer Equipment (All Depts) 130,651 628,278 334,000 323,200 287,000 171,000 613,000 360,000 154,000 1,585,000

971 New Phone System - - - - - - 169,000 467,000 - 636,000

972 Outage Management System - - 13,000 - 13,000 - - - - 13,000

Current Year CIP Budget 618,767 632,228 1,687,000 1,598,500 864,000 395,000 929,000 1,632,000 2,370,000 6,190,000

Prior Year CIP Budget - As Amended 1,687,000 841,000 239,000 1,267,000 1,754,000 1,858,000 5,959,000

Current Year (over) under Prior Year 88,500 (23,000) (156,000) 338,000 122,000 (512,000) (231,000)

96


GENERAL PLANT – TECHNOLOGY - 2020

Budget Item 906: Enterprise Systems/Software (All Depts.) - $522,000 This budget item covers all critical and enterprise software for customer information and billing, finance, payroll, information retention and workflow management. Costs include purchase of a maintenance management system for work orders, inventory management and purchasing; a meter data management system and enhancements to existing technology. Budget Item 910: Shared Computer System Infrastructure - $42,000 This budget item covers the expansion of capacity and technology upgrades for the network data storage, blade server and data backup systems shared by Communications, Information Systems, and SCADA. This also includes other shared equipment related to systems security and disaster recovery. Budget Item 911: General Computer Equipment - $287,000 This budget item provides for the computer equipment needs for employees, the internal network, systems security, and disaster recovery. Budget Item 972: Outage Management System - $13,000 This budget item provides for the Outage Management System (OMS). The purchase of a lineman’s app will allow lineman and on call personnel full OMS functionality using a mobile device.

97

CAPITAL BUDGET REQUEST FY 2020CIP BUDGET ITEM SUMMARYGENERAL PLANT - FACILITIES AND EQUIPMENT

Budget Item Project Title or Asset Name

2017Actual

2018Actual

Current Year

Published

Current Year

Reforecast2020 2021 2022 2023 2024

2020-2024TOTAL

915 Facilities and Security 1,730,779 3,513,215 612,000 881,700 1,328,000 588,000 693,000 292,000 302,000 3,203,000

916 Office Furniture And Equipment 10,538 34,500 70,000 70,000 40,000 14,000 15,000 15,000 17,000 101,000

917 Heavy-Duty Shelving for General Use 2,825 63,052 53,000 15,300 16,000 7,000 7,000 7,000 7,000 44,000

919 Technical And Educational Equipment 6,135 10,219 1,000 10,200 21,000 5,000 6,000 6,000 6,000 44,000

920 Tools And Equipment 73,670 98,079 144,000 109,500 142,000 98,000 101,000 105,000 115,000 561,000

970 Fleet Replacement 836,878 590,450 708,000 716,900 754,000 767,000 824,000 878,000 883,000 4,106,000



Current Year (over) under Prior Year (215,600) (849,000) 179,000 (432,000) (104,000) (79,000) (1,285,000)

98


GENERAL PLANT – FACILITIES AND EQUIPMENT ‐ 2020

Budget Item 915: Facilities and Security ‐ $1,328,000 This budget item is for improvements for buildings, security and grounds. Planned improvements include installing a second computer room air conditioner for the Headend area, new concrete for parking lot and various security upgrades. Budget Item 916: Office Furniture and Equipment ‐ $40,000 This budget item provides for purchases as needed for additional workstations, equipment and accessories. These expenses will enhance work environments, improve workflow and improve employee efficiency and productivity. Budget Item 917: Heavy‐Duty Shelving for General Use ‐ $16,000 This budget item covers shelving needs in various areas of operation including the truck bays, warehouse, records room, Annex, Viking and BDC buildings and for office supply storage. Budget Item 919: Technical and Educational Equipment ‐ 21,000 This budget item provides for unanticipated requests for technical and educational equipment, to facilitate employee and customer training and development. Planned upgrades include upgrading the boardroom and visitor’s conference room audio/video system and installing schedule boards outside of each conference room. Budget Item 920: Tools and Equipment (All Depts.) ‐ $142,000 This budget item provides for the purchase of small tools and equipment for all utilities as needed. Budget Item 970: Fleet Replacement ‐ $754,000 This budget item provides funding for replacements and additions to the fleet. Purchases will follow the normal process for purchasing vehicles and equipment and will be approved prior to the bidding and expenditure of funds. Replacements will be purchased for units that are no longer cost effective for the Utilities to operate and maintain.

99

Documents

Cedar Falls Utilities 2020 Annual Budget · Cash Flow 37 ‐ 39 ... approximately 3.5% and union contract wages have been set at 3% in 2020. ... Sec. 384.18 of Iowa Code provides