TID Annual Report - 2017

TURLOCK IRRIGATION DISTRICT

2017 ANNUAL REPORT

www.tid.org

TID MISSION

BOARD OF DIRECTORS

TID will provide reliable and competitively priced water and electric service, while being good stewards of our resources and providing a high level of customer satisfaction.

Charles Fernandes, President Rob Santos, Vice President Michael Frantz, Secretary Joe Alamo Ron Macedo

SERVICE AREA DON PEDRO LAKE XY Y X

MODESTO

Y X

Y X

TUOLUMNE RIVER Y X

Y X

X

X

Y X

CERES

Y X

Y X Y X

TURLOCK LAKE

Y X

X

Y X

Y X

HUGHSON

Y X

Y X

XY

KEYES

X Y X Y X

DENAIR TURLOCK

Y NT OU NTY SC U U O A L DC NIS RCE STA ME

N SA DELHI BALLICO XY

RIV

5

N UI AQ JO

PATTERSON

ER

HILMAR XY

X

Y X

Y X

Y X

Y X X

XY

Y X

Y X

Y X

Y X

SANTA CLARA COUNTY

Y X

XY

STANISLAUS COUNTY

RI CED MER Y X

XY

VER

H IG

HW AY 99

ELECTRICAL SERVICE AREA IRRIGATION SERVICE AREA

TID OVERVIEW Established in 1887, the Turlock Irrigation District (TID) was the first publicly owned irrigation district in the state.

Today it is one of only four irrigation districts in California that also provides electric retail energy directly to homes, farms and businesses. Organized under the Wright Act, the District operates under the provisions of the California Water Code as a special district. TID delivers irrigation water through 250 miles of a gravity-fed canal system that irrigates approximately 150,000 acres of farmland. In addition, TID owns and operates an integrated and diverse electric generation, transmission and distribution system that serves more than 102,000 customer accounts within a 661 square-mile area. TID is one of seven Balancing Authorities in California and operates independently within the Western United States power grid. A Balancing Authority performs a balancing function in which customers’ usage and resources are matched on a moment-by-moment basis. TID is governed by a five-member, locally elected Board of Directors.

02

A LETTER FROM THE GENERAL MANAGER In the public utility sector, there is often a thin line between excitement and anxiety.

January 2017 yielded 20.07 inches of precipitation - three times the historic average. Coming off of a severe drought, we welcomed the wet conditions, but February’s rain was unrelenting and ultimately resulted in the decision to open one of three controlled spillway gates at Don Pedro Reservoir.

It had been 20 years since the floods of 1997, when all three spillway gates required use to protect Don Pedro Dam and Powerhouse. The difference this time?

We had time to prepare, which was imperative as we safeguarded public safety.

We coordinated closely with multiple counties to ensure those who were to be affected had time to evacuate safely. Power lines and street lights along Bonds Flat Road were de-energized and removed and non-residential power along the Tuolumne River was disconnected. Bonds Flat Road was removed downstream of the controlled spillway to reduce additional debris downstream. On February 20, the center gate of the spillway was opened, releasing flows of 18,000 cfs. The spillway operated as expected and remained open for seven days. Ultimately, 2017 was the Tuolumne’s wettest year on record. To put that in perspective, it was enough to cover the entire state of Connecticut with nearly a foot of water. (Connecticut is 3,547,731 acres.)

With much less anxiousness, in 2017 TID also completed an update of its Strategic Plan. The plan focuses on five operating strategies: Water and Electric Supply & Distribution, Finance & Rates, Workforce, Customer Service and Community Relations and Legislative and Regulatory initiatives. The plan will continue to be used as a roadmap for making strategic changes that will push the District further in its mission and benefit TID customers for years to come.

The District continued its buildout of our campus by beginning renovation of the new Power Control Center. The technical advances the new control center allows TID to better isolate power issues and respond even faster to outages throughout the District.

Finally, in 2017 the District celebrated its 130th Anniversary of our 1887 formation.

Reflecting on 130 years helped us appreciate the advancements we have made, the struggles we have overcome, and throughout, the District’s dedication to delivering reliable and competitively priced water and electric service to our customers. To help showcase TID’s long and storied history, the District created a beautiful, hard cover photo book. Copies were provided to the local libraries and the Turlock Historical Society and are also available for purchase through the District. A sampling of the pictures used in the book can be seen throughout this report.

We look forward to what the next 130 years will bring. We know not all the excitement to come will be the good kind. Nevertheless, the District stands ready to respond to new challenges with an authentic reverence to our stewardship of the public’s resources.

Casey Hashimoto, PE

03

Celebrating 130 Years

1887-1923

04

1887

TID, the first Irrigation District, is formed

1893

La Grange Diversion Dam is completed

1900

First Irrigation water delivered

1914

Turlock Lake is constructed to store water

1923

Original Don Pedro Dam and Powerhouse is built to store 289,000 acre feet of water & generate power

Celebrating 130 Years

1924-1925 La Grange Power Plant is constructed

1924

TID Provides power to electric customers and opens an appliance store in downtown Turlock

1925

05

TID begins constructing the first of eight, small-scale hydroelectric power plants in 1979. The plants are located on TID’s canal system and surrounding irrigation districts’ canals.

Strategically located where water drops from sufficient heights with a force great enough to spin a turbine, these small plants help the District meet California’s ever-increasing requirement for renewable generation.

Celebrating 130 Years

1971-1995

New Don Pedro dam, powerhouse and reservoir increase flood control capabilities, power production and water storage, as well as create recreational opportunities for the area.

1971

TID begins constructing the first of eight, small-scale hydroelectric power plants

1979

TID acquires an interest in a geothermal power plant in the Geysers Steam Field

1984

Walnut Power Plant, a natural gas/diesel-fired, dual-fuel power plant, begins operation with a generating capacity of 49.9 megawatts

1986

Almond Power Plant, a natural gas-fired plant, begins operation with a generating capacity of 48 megawatts

1995

07

Celebrating 130 Years

2003-2009

08

2003

TID purchases 225 square-miles of energy service area from Pacific Gas & Electric and includes about 10,000 customers in Patterson, Crows Landing, Del Puerto Canyon and Diablo Grande and opens TID Customer Service location in Patterson.

2005

TID obtains its certification as an independent Balancing Authority, allowing the District to operate independently within the Western United States power grid.

2006

Walnut Energy Center (WEC), a natural gas-fired, base-load power plant, begins operation with a generating capacity of 250 megawatts

2008

The District secures a wind generation facility (Tuolumne Wind Project) in Klickitat County, Washington, capable of generating a total of 136.6 megawatts of renewable energy

2009

TID brings its commitment to renewable energy to its own backyard by installing a 70 kilowatt AC array atop its renovated parking structure at the Canal Office location.

Celebrating 130 Years

2009-2012

To better serve customers in Keyes, Ceres and South Modesto, TID opens a Customer Service location in Ceres.

2009

Turlock Irrigation District, in coordination with Modesto Irrigation District, begins the multi-year endeavor of the Federal Energy Regulatory Commission (FERC) Integrated Licensing Process (ILP) for the relicensing of the Don Pedro Project.

2011

The Almond 2 Power Plant becomes fully operational and provides an additional 174 megawatts of TID-owned generation that furthers power supply reliability.

2012

09

Celebrating 130 Years

2014-2016 2014

THE LATERAL 8 RESERVOIR PILOT PROJECT includes beginning construction of the Lateral 8 Regulating Reservoir to increase water efficiency and reduce operational spills, and the Lateral 8 Channel Control Pilot - a system of automated drops and gates, that better regulate the flow of water in the canal system.

2016

The District uses the irrigation off-season to complete the LATERAL 8 REGULATING RESERVOIR EXPANSION PROJECT which quadruples the pond completed in the previous year. Storage capacity of the expanded reservoir is 130 acre feet.

TID ENTERED INTO A PURCHASE POWER AGREEMENT to purchase 54 megawatts of clean, renewable solar power from Rosamond Solar site in Kern County, CA. The agreement furthers TID’s efforts to meet current and future Renewable Portfolio Standard obligations and adds to the District’s diverse portfolio of greenhouse-gas-free resources, which include wind, hydro, geothermal, and solar.

The current Don Pedro Project FERC license expires on April 30. TID BEGINS OPERATION OF DON PEDRO under an annual license issued by FERC. Turlock Irrigation District and Modesto Irrigation District launch WORTH YOUR FIGHT, an advocacy campaign devoted to informing TID and MID customers about the potential negative impacts associated with Phase 1 of the State Water Resources Control Board’s Bay-Delta Water Quality Control Plan.

The campaign yields 1,025,000 social media impressions and over 269 unique articles related to the cause.

10

Celebrating 130 Years

2017

The weather events of late 2016 and 2017 brought an end to the driest four-year period in California’s recorded history. In contrast, 2017 ended up being the wettest year on record for basin yield. Though the snowpack was only 70% of average heading into the middle of December 2016, unrelenting winter storm systems that developed early to mid-January, at the end of January and early February caused Don Pedro Reservoir to rise to a height of 827.84 feet above mean sea level on February 13th.

TID had already been releasing the legal maximum allowed under our license but as another atmospheric river was forecasted to arrive the week of February 19th, and with only three feet of space left, the decision was made to prepare to open the dam’s spillway gates. Power lines and street lights along Bonds Flat Road were removed. Non-residential power along the Tuolumne was disconnected and residents living on or near the river were notified that all power to those properties would be disconnected when the spill gates are opened. Finally, on February 20, the decision to open the controlled spillway using one gate is made and Bonds Flat Road is removed downstream of the controlled spillway. The middle gate of the DON PEDRO DAM CONTROLLED SPILLWAY is opened at 3:00 p.m. Initial flows were 18,000 cfs, and were quickly reduced to 16,000 cfs. The spillway facility operated as planned and both the spillway and the dam remain structurally sound. The gate remained open for seven long days as the District carefully monitored reservoir and river levels and what those levels meant to customers and property below the spillway.

As part of the FERC licensing project for Don Pedro, which started in 2011, the TUOLUMNE RIVER MANAGEMENT PLAN is created by MID and TID. The Plan is the culmination of a multi-year, comprehensive effort by the Districts in consultation with numerous federal and state resource agencies, Indian tribes, and members of the public, to achieve the co-equal goals of protecting both the natural resources of the lower Tuolumne River and the water supply to our communities.

2017 also brought excitement of the more predictable kind with the CELEBRATION OF THE DISTRICT’S 130TH ANNIVERSARY. To commemorate 130 years of service to the region, TID compiled hundreds of historic and contemporary photos to produce an award-winning coffee table photo book. The book serves as a beautiful representation of 130 years of foresight, strategic planning, commitment and perseverance that changed our dry, desolate valley into the productive agricultural center it is today.

11

COMMUNITY STATISTICS

IN 2017...

TID Employees participated in over 15 Career Days within the District service area for students in elementary school through college.

1,155 community members were given free entry to one of seven public pools in the District. TID provided the pool passes to encourage children and adults to swim in safe places and to stay away from canals.

$

The TID Community Sponsorship Program sponsored local events and programs in excess of $33,500.

TID 30-second water safety videos featuring Dexter Duck ran prior to films in the Turlock 14 Cinemas for a total of 12 weeks during the summer.

TID’s aquatic biologist taught more than 23 elementary school classes about the Chinook salmon lifecycle and helped hundreds of children release baby salmon to local rivers in the spring.

12

Energy Efficiency

residential customers received rebates

LED bulbs were distributed as part of an exchange program or as give-aways

commercial customers received holiday light strands were exchanged by customers for LED light strands kWhs in rebate savings

non-res customers participated in LED direct install program, saving

kWhs total saved in 2017

kWhs

13

Historical Results of Operations ($ In thousands)

2017

2016

2015

2014

2013

OPERATING REVENUES: Electric energy - Retail Electric energy - Wholesale Wholesale Gas Irrigation Other Total Operating Revenue

$304,200

$257,495

$262,657

$275,699

$252,162

51,482

41,140

50,973

64,341

73,460

13,145

5,041

2,898

17,061

12,391

4,273

13,023

14,311

7,758

8,438

5,173

1,637

1,640

4,293

3,944

378,273

318,336

332,479

369,152

350,395

68,505

OPERATING EXPENSES: Power Supply: Purchased Power

55,237

53,615

55,202

63,926

Generation and Fuel

95,281

76,808

97,656

121,951

107,391

Total Power Supply

150,518

130,423

152,858

185,877

175,896

Other Electric O&M

26,512

26,932

23,330

22,730

23,506

Irrigation O&M

12,474

13,336

11,294

11,828

12,623

Public Benefits Administration and General

5,457

5,841

6,119

6,962

6,908

24,786

23,707

21,135

21,640

20,528

-

2,438

Loss of disposal of utility plant Depreciation and amortization Total Operating Expenses OPERATING INCOME

64,567

64,691

62,515

70,442

64,496

284,314

264,930

277,251

319,479

306,395

93,959

53,406

55,228

49,673

44,000

OTHER INCOME: Interest/Derivative gain

3,230

2,056

3,668

1,271

562

Miscellaneous

10,028

10,512

13,851

9,357

9,119

Total Other Income

13,258

12,568

17,519

10,628

9,681

47,473

51,255

53,000

57,338

59,996

59,744

14,719

19,747

2,963

(6,315)

310,814

296,095

276,3418(1)

304,009

310,324

$370,558

$310,814

$296,095

$306,972

$304,009

2.81x

2.91x

2.81x

2.35x

2.83x

INTEREST EXPENSE Long Term Debt NET INCOME (LOSS) NET POSITION: BEGINNING OF YEAR END OF YEAR DEBT SERVICE COVERAGE REVENUE BONDS/COP’S

(1) Government Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Report for Pensions, was a adopted in 2015 and as a result beginning of year Net Position was restated as of January 1, 2015

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HISTORICAL OPERATING STATISTICS 2017

2016

2015

2014

2013

AVERAGE CUSTOMERS AT END OF PERIOD: Residential

73,381

73,029

72,772

72,909

72,366

Commercial

7,236

7,148

7,086

7,090

7,065

860

866

836

830

794

Industrial Other(1)

20,853

20,814

20,676

20,160

20,046

102,330

101,857

101,370

100,989

100,271

Residential

764,099

714,966

706,945

725,523

716,316

Commercial

133,967

128,568

131,135

130,606

128,154

Industrial

774,613

774,467

766,170

749,864

747,745

Other(1)

375,219

382,287

411,734

399,761

393,316

2,047,898

2,000,288

2,015,983

2,005,754

1,985,531

Total MWh SALES:

Total Retail Interdepartmental meters

48,871

58,883

62,565

69,199

68,235

1,379,433

1,260,372

1,439,114

1,388,342

1,641,616

3,476,202

3,319,543

3,517,662

3,463,295

3,695,382

Generated by district

2,251,144

1,954,296

2,267,333

2,257,182

2,214,620

Purchased

1,307,532

1,443,813

1,319,345

1,281,089

1,563,500

3,558,676

3,398,109

3,586,678

3,538,271

3,778,120

Wholesale Power Total SOURCES OF MWh:

Subtotal System losses

82,474

78,566

69,016

74,976

82,738

3,476,202

3,319,543

3,517,662

3,463,295

3,695,382

$122,325

$114,519

$113,282

$114,169

$109,790

19,013

18,283

18,540

18,319

17,756

Industrial

93,356

92,721

91,521

87,318

85,711

Other(1)

51,034

51,819

55,190

52,226

50,453

Power Supply Adjustment Recognized (Deferral)

17,927

(20,398)

(16,424)

3,093

(12,112)

303,655

256,944

262,109

275,125

251,598

489

473

470

497

488

56

78

78

77

76

304,200

257,495

262,657

275,699

252,162

51,482

41,140

50,973

64,341

73,460

$355,682

$298,635

$313,630

$340,040

$325,622

549

527

517

510

527

Total ELECTRIC ENERGY REVENUES: ($ IN THOUSANDS) Residential Commercial

Total Retail Energy Electric Service Charges Other Electric Revenue Electric Energy Retail Wholesale Power Total SYSTEM PEAK DEMAND (MW) AVERAGE MWh SALES PER CUSTOMER Residential

10.413

9.790

9.715

9.951

9.899

Commercial

18.514

17.987

18.506

18.421

18.139

900.713

894.304

916.471

903.451

941.744

Industrial AVERAGE REVENUE PER MWh Residential

$160.09

$160.17

$160.24

$157.36

$153.27

Commercial

$141.92

$142.20

$141.38

$140.26

$138.55

Industrial

$120.52

$119.72

$119.45

$116.45

$114.63

$0.065

$0.066

$0.072

$0.080

$0.070

AVERAGE COST OF POWER PER KWh FOR RETAIL LOAD (2)

(1) Includes agricultural and municipal water pumping, street lighting, and interdepartmental meters.

(2) Includes depletion and depreciation on generation assets, excludes debt service.

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