NID adopts 2014 budget, is rated ‘AA’
November 5, 2013
Nevada Irrigation District has adopted a combined overall 2014 district budget of $60.4 million.
The board of directors of the water agency approved the annual budget during its regular October meeting.
The overall calendar year budget includes a $41.2 million Water Division budget, a $17.3 million Hydroelectric Division budget and a $1.8 million Recreation Division budget, according to an NID news release.
NID Finance Manager Jim Malberg said Water Division revenues are projected to be $10.5 million less than expenditures and would be supplemented by $3 million in hydroelectric power sale revenues and the withdrawal of reserve funds.
The 2014 budget maintains the status quo, and the district's revenues from providing reliable public water service continue to lag behind its costs of service, Malberg said.
"We have zero percent growth on the water revenue side," said Malberg, who noted that next year's preliminary spending plan has already been reduced through several rounds of cuts.
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To remedy the imbalance between revenues and expenses, the NID board of directors has conducted cost-of-service studies and is reviewing the need for modest water rate increases. Water rate discussions are planned in the weeks to come.
General Manager Rem Scherzinger said water ratepayers are seeing benefits envisioned by NID leaders of the 1960s, who planned and developed NID's Yuba-Bear Hydroelectric Power Project.
"Without the transfer of hydroelectric funds, we would be looking at 8 or 9 percent water rate increases," Scherzinger said.
"The use of power revenues to support water operations was a long-range vision of the board of directors back in the 1960s. They saw the hydroelectric system as a key resource for district ratepayers."
NID receives favorable rating
NID has maintained a "AA" rating from Fitch Ratings Service for its 2011 water system revenue bond issue of $26.7 million, according to a recently posted news release.
The bonds, issued through the NID Joint Powers Authority, have been used to finance major capital improvements on the NID water system and are being repaid through water system revenues.
The Oct. 31 "AA" rating, second only to a "AAA" rating, reaffirms NID's steady financial performance, strong credit rating and strong water system characteristics, including ample supplies of high quality water and hydroelectric power assets that should provide strong additional revenues, the release states.
Key factors in the ratings as reported by Fitch include favorable revenue diversity, strong overall financial margins, favorable hydroelectric operating risk, ample water supply, federal power relicensing in process and a stable rural regional economy.
Fitch, headquartered in New York and London, is one of three nationally recognized rating organizations, along with Moody's and Standard & Poors.
The three are commonly known as the "Big Three" credit rating organizations.