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Water and Wastewater Services Statement of Operations - Quarter 2 Financial Update (2016)

  Year to Date Annual
Budget Actual Budge vs Actual Variance
Favourable / (Unfavourable)
Budget Forecast Budge vs Forecast Variance
Favourable / (Unfavourable)
Expenses
Compensation $ 10,740,726 $ 10,358,199 $ 382,527 3.7% $ 21,396,606 $ 20,921,350 $ 475,256 2.2%
Administrative 2,429,176 1,387,578 1,041,598 75.1% 4,091,426 3,678,596 412,830 10.1%
Operational & Supply 5,175,655 5,010,759 164,896 3.3% 10,351,310 10,440,130 (88,820) (0.9%)
Occupancy & Infrastructure 7,899,420 6,853,648 1,045,772 15.3% 15,798,841 16,596,399 (797,559) (5.0%)
Equipment, Vehicles, Technology 2,507,988 2,093,834 414,155 19.8% 5,015,977 4,936,809 79,168 1.6%
Partnership, Rebate, Exemption 6,412,282 77,412 6,334,870 8183.3% 11,234,897 10,677,412 557,485 5.0%
Financial Expenditures - (6,173) 6,173 (100.0%) - (6,173) 6,173 0.0%
Total Expenses 35,165,247 25,775,257 9,389,991 36.4% 67,889,057 67,244,524 644,534 0.9%
Revenues
Taxation (54,044,614) (53,600,062) (444,552) 0.8% (108,089,228) (108,589,939) 500,710 (0.5%)
By-Law Charges & Sales (533,100) (462,541) (70,559) 15.3% (1,066,200) (963,291) (102,909) 9.7%
Other Revenue 149,750 (104,375) 254,125 (243.5%) (1,556,154) (1,493,157) (62,997) 4.0%
Total Revenues (54,427,964) (54,166,978) (260,986) 0.5% (110,711,582) (111,046,387) 334,805 (0.3%)
Intercompany Charges
Intercompany Charges 945,362 923,467 21,895 2.4% 1,889,707 1,867,812 21,895 1.2%
Total Intercompany Charges 945,362 923,467 21,895 2.4% 1,889,707 1,867,812 21,895 1.2%
Net Expenditure (Revenue) Before Transfers & Indirect Allocations (18,317,355) (27,468,255) 9,150,900 (33.3%) (40,932,818) (41,934,051) 1,001,234 (2.4%)
Transfers
Transfers From Funds (6,219,504) (6,219,504) - 0.0% (10,811,465) (10,811,465) - 0.0%
Transfers To Funds 20,125,535 20,125,536 - 0.0% 40,251,071 40,251,071 - 0.0%
Total Transfers 13,906,031 13,906,032 - 0.0% 29,439,606 29,439,606 - 0.0%
Indirect Allocations & Debt
Indirect Allocation 1,925,765 2,020,315 (94,549) (4.7%) 3,876,249 4,112,259 (236,010) (6.1%)
Capital Financing Allocation 5,536,393 5,516,802 19,591 0.4% 7,616,963 7,599,601 17,362 0.2%
Total Indirect Allocations & Debt 7,462,158 7,537,117 (74,959) (1.0%) 11,493,212 11,711,860 (218,648) (1.9%)
Net Expenditure (Revenue) After Transfers & Indirect Allocations $ 3,050,835 $ (6,025,106) $ 9,075,941 (150.6%) - $ (782,585) $ 782,585 0.0%

Variance Analysis

Compensation

The favourable year-to-date and forecasted variances of $382,527 and $475,256 are a result of vacancies of wastewater operators and administrative roles.

Administrative

The favourable year-to-date and forecasted variances of $1,041,598 and $412,830 are driven mainly by lower than expected spending in consulting ($970,939 year-to-date, $299,388 forecasted) due to lack of staff capacity to manage consulting engagements.

Occupancy & Infrastructure

The favourable year-to-date variance of $1,045,772 is primarily due to the timing of property tax payments ($797,812), the timing of spending for building and grounds repair and maintenance ($758,551) and is offset by higher than budget utility costs due to increased rates ($611,495). The unfavourable forecasted variance of $797,558 is also due to the increased utility rates ($1,202,195) offset by the repair and maintenance funds that are not anticipated to be fully utilized in Q3 and Q4.

Equipment, Vehicles, Technology

The favourable year-to-date variance of $414,155 is due to lower than budgeted spending for machinery and equipment repair and maintenance ($433, 044), offset by increased computer software costs related to the ongoing roll out of a mobile maintenance platform ($12,811). Significant repairs are expected at the Niagara Falls wastewater treatment plant in Q3 and Q4 resulting in a reduced forecasted favourable variance of $79,168.

Partnership, Rebate, Exemption

The favourable year-to-date variance of $6,334,870 relates primarily to the timing of expenses related to the 2015 Combined Sewer Overflow (CSO) encumbrance ($6,412,282). The favourable forecasted variance of $557,485 represents the unsubscribed 2016 CSO funds that will be returned to reserves at year end. All other subscribed but unpaid funds will be encumbered at year end.

Taxation

The unfavourable year-to-date variance of $444,552 is driven by the demand for water being lower than budgeted for the first half of 2016. Hotter and drier than normal weather in Q3 has led to increased water usage and sales. It is expected that flows will be approximately 1,458 megalitres higher than projected during the remainder of the year resulting in a forecasted favourable variance of $500,710, net of a refund to the Town of Grimsby for an overcharge in the prior year resulting from a break on a regional transmission main.

By-Law Charges & Sales

The unfavourable year-to-date and forecasted variances of $70,559 and $102,909 are due to lower than budgeted sewer surcharge revenue ($42,471 year-to-date, $67,471 forecasted), lower than budgeted environmental services revenue ($14,795 year-to-date, $16,795 forecasted), and lower than budgeted tender document fees ($14,050 year-to-date, $15,550 forecasted).

Other Revenue

The favourable year-to-date variance of $254,125 and unfavourable forecasted variance of $62,997 are due the timing and recognition of development charge revenue related to the CSO program, as well as the timing of revenues for telecommunications equipment mounted to regional water towers.

Community Impacts & Achievements

  • The Water and Wastewater Operations Divisions treated 57.6 billion litres of water in 2015 through six water treatment plants and 316 km of water mains, as well as 67.8 billion litres of wastewater through eleven plants and one bio solids storage facility, with collection through 123 pump stations and 283 km of forcemains and gravity sewers.
  • The divisions provide input into water and wastewater approvals and master plans, design and construction, laboratory services, utility locates, source water protection, bio solids management, and environmental monitoring and enforcement.
  • A division wide re-organization which consisted of decentralizing core maintenance and the creation of a new Integrated Systems division was undertaken to streamline processes, improve efficiencies and increase customer service.
  • Significant programs in 2016 include the ongoing "How We Flow" Master Servicing Plan, Security Master Plan, Maintenance Mobile Solution, wet weather flow monitoring project with the Town of Fort Erie, continued refinements to the Port Colborne water loss program, enhanced community involvement and outreach such as the Children's Water Festival, water wagon deployment and Public Works Week which included facility tours and events for the public.
  • Construction is nearing completion at the Niagara-on-the-Lake and Welland wastewater treatment plants. Construction of the new Port Colborne water tower is now underway.
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