Quality Service el paso water utilities public service board 2013 annual report

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essage from the President/CEO and... El Paso Water Utilities has had a successful year under the leadership of President and Chief Executive Officer John Balliew. He replaced Ed Archuleta who retired in 2013 after 24 years of service to EPWU.

John Balliew, P.E. President/CEO Public Service Board Richard T. Schoephoerster, Ph.D., P.E. Chair Ruth Katherine Brennand Vice Chair David C. Nemir, Ph.D., P.E. Secretary-Treasurer

Severe drought conditions continued to impact Rio Grande water users in 2013. A below average winter snowpack combined with warm, windy spring weather led to historically low river water flows. The water level at Elephant Butte reservoir was 92 feet below the dam spillway when the irrigation season started. Releases began June 1 and ended six weeks later, but EPWU was prepared.

Drought relief projects increased our groundwater capacity. We pumped more fresh and brackish water from underground aquifers and encouraged conservation to stretch water supplies. We’ve had three consecutive years of reduced river water allocations, but the water demand has been met. Staff and stakeholders collaborated during our strategic planning. The new mission and vision statements are products of the plan. You’ll see a robust capital improvement program, innovative management strategies and enhanced communication. We’re streamlining processes and

Richard C. Bonart, DVM Member Terri Garcia Member Henry Gallardo Member Mayor Oscar Leeser Member Schoephoerster

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Brennand

developing resources, both human and natural. The Stormwater Advisory Committee provided input on prioritizing master plan projects. Members recommended accelerating the work in high-profile, high-traffic areas, specifically Doniphan Drive and I-10. The reclaimed water strategy was revised to incorporate purification projects. Purification transforms reclaimed water into a droughtproof source of drinking water. We reallocated funds appropriated for reclaimed water projects to purification projects at our wastewater

plants. However, reclaimed water lines will be extended to the Rio Bosque Wetlands and, potentially, Fort Bliss. Rating agencies express continued confidence in the utility’s financial performance. Standard & Poor’s upgraded our credit rating to AA+ and affirmed our A1+ short-term rating on commercial paper notes. The upgrade, coupled with our Fitch Ratings AA+ rating, translates into lower borrowing costs that benefit ratepayers. El Paso’s water and wastewater rates are among the lowest in the state.

Mission To provide our customers a sustainable water supply and the highest quality water services at a reasonable cost with excellent customer service.

Vision To sustain the future of the community through proper planning and implementation of diverse and alternative strategies.

...the Public Service Board

Nemir

Bonart

Garcia

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Gallardo

Mayor Leeser

The 48-inch Paisano Valley transmission line will carry 43 million gallons of water per day to downtown El Paso.

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Extreme drought conditions continued into 2013. The winter snowpack was well below average, resulting in the lowest inflow into upstream reservoirs in 97 years. In May, the Elephant Butte reservoir was still 90 percent empty. EPWU received only one-sixth of the allotment it receives in a full river supply year. Fresh and brackish groundwater offset the lack of river water. The utility drilled and equipped new wells and rehabilitated existing wells to increase the amount of water available from the aquifers. Construction continued on pipelines being built to move water through the city. These large-diameter pipes can carry water from well fields in areas where it is plentiful to areas that rely heavily on river water during late spring and summer months. A communications program advised

residents of the low reservoir levels, the impact on the city’s water supply, and the importance of conservation. Outreach increased as temperatures escalated in May. El Paso treats river water from March until October in nondrought years. Due to proactive planning and aggressive outreach however, EPWU met customer demand. Backup Generators Backup generators at the RobertsonUmbenhauer Water Treatment Plant ensure that the plant can operate during a power outage. The plant switches automatically to two diesel-powered units. The generators can operate the plant at its full capacity of up to 40 million gallons of water per day.

(above) Hand mining was required to tunnel through sandy areas for the Paisano Valley transmission line project.

These are the first of the generators recommended by the 2012 Black & Veatch study of power

(below) The Rio Grande river bed was dry until June.

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reliability at EPWU water facilities. The Robertson-Umbenhauer Plant serves central and west El Paso. Capital Projects The new Vista Del Sol pump station and its associated water line provide water to the city’s growing far east area. These facilities serve neighborhoods east of Loop 375.

This monitor receives signals transmitted by high-tech leak detection loggers.

Phase 2 of the Mesa Street water line replacement project is underway in west El Paso. The pipeline was constructed in 1965 and has had several breaks in recent years. EPWU is replacing 6,100 feet of pipe – from Fountain Road to Crestmont Drive. Older pipelines are being replaced in other areas of the city under the ongoing routine line rehabilitation program. Conservation Customers are not alone in reducing water usage. EPWU is implementing and researching initiatives that conserve water and increase efficiency, including using leak detection equipment and recirculating the water used to flush water lines.

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After testing the industry’s best systems, EPWU purchased 12,000 high-tech loggers. The units, which are placed throughout the water distribution system, transmit a signal when they detect a leak. This early detection is the key to reducing water main breaks in El Paso. EPWU conserves water and reduces operating expenses by repairing leaks before they cause pipelines to break. The patented Neutral Output Discharge Elimination System recirculates the water used to flush waterlines. The equipment pumps water through filters that remove sediment. Chlorine is added, if needed, and the water goes back into the system. The system helps eliminate the negative perception created when water is discharged from fire hydrants. EPWU is waiting for approval from the Texas Commission on Environmental Quality (TCEQ) before using the equipment.

The Bustamante Plant’s new membrane diffusers are energy efficient.

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Lower Valley Interceptor EPWU fast-tracked construction when a large wastewater collector line showed signs of aging. Using emergency procedures reduced the project time by six months. The Lower Valley Interceptor was installed in the mid-1960s. It carries 7 million gallons of wastewater per day. EPWU had planned to replace the pipeline in fiscal year 2013-14, but a rash of sinkholes signaled that deterioration was underway. The utility quickly selected an engineering firm for construction administration and a contractor for construction. Bypass pumping kept wastewater flowing as sections of concrete pipe were replaced with fiberglass. Construction began in October 2012 and was completed in May 2013. Phase 2 presented its own complications. The interceptor runs between the railroad right of way and private property easements. Replacement would have inconvenienced residents and increased the project cost. EPWU selected cured-in-place technology to rehabilitate the pipeline. Polymer fiber pipe was pulled through the existing pipeline and

cured with hot water or steam. The result is a sound, structural pipeline that has a 100-year life. Engineers estimate that using more traditional methods would have cost $10.6 million. The trenchless curedin-place pipeline method of rehabilitation cost only $3.6 million. New Diffuser System A diffuser system being installed in aeration tanks at the Bustamante Wastewater Treatment Plant will reduce the plant’s energy footprint. The membrane diffusers it uses are more energy-efficient, require less maintenance and last longer than the ceramic units they replaced. Compared to ceramic diffusers, membrane diffusers are easier to clean and they are not cleaned as often. They are also more durable and have higher oxygen transfer efficiency, which reduces energy costs. More power is used for aeration than for other wastewater treatment processes. The new diffuser system is the first project to be implemented following a process improvement assessment of the plant.

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The trenchless method of rehabilitating the pipeline saved $7.0 million in project costs.

EPWU is extending reclaimed water service from the Haskell Street Wastewater Treatment Plant to north central El Paso. This tank, which is nearing completion, will potentially serve areas within and to the west of Fort Bliss.

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North Central Reclaimed Water Many communities discharge treated wastewater into rivers, streams or oceans, but wastewater is valuable in El Paso. This drought-proof resource reduces demand on the potable water system and helps preserve long-term water supplies. Treated water from the Haskell Street Wastewater Plant serves several sites in Central El Paso, and the North Central Reclaimed Water Project expanded the reclaimed water system into north central neighborhoods. Nearly half of the project cost is funded by the U.S. Environmental Protection Agency. Transmission and distribution lines were extended in Phase 1 to serve parks and schools located north of the plant, and a 1.5-million-gallon storage tank is almost complete. Subsequent phases of the project will provide reclaimed water service to large turf areas within and to the west of Fort Bliss. Purifying Water EPWU has begun the process of building an advanced purified water treatment plant. The plant would be built in the Mission Valley between the water and wastewater plants.

When treated water from wastewater plants is discharged into rivers, the river water is treated at downstream plants and reused in businesses and homes. EPWU will send treated water directly to a purification plant rather than downstream for other users. The plant will purify up to 10 million gallons of water per day. An engineering firm is managing the first phases of the project, which includes designing a pilot plant, planning pilot testing, and coordinating meetings with the TCEQ. With TCEQ approval, EPWU will build and operate the pilot plant. If the pilot plant data is satisfactory, the commission will permit the plant to be designed. Most respondents to a customer survey were supportive of the project. Staff is planning extensive outreach to inform the public about the plant. Water for Rio Bosque The Rio Bosque is owned by El Paso Water Utilities and managed by the University of Texas at El Paso (UTEP). The site was once filled with native plant communities, but drought, the dropping water table, and hot, dry summers leave little water for irrigation during the

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North Central Reclaimed water line being installed.

critical growing season. Many trees and plants have died. Treated water from the Bustamante Wastewater Plant was used for irrigation in the fall and winter, but that water was not available at other times of the year. One well produced water for the park’s 372 acres. Volunteers and staff trucked water to the park’s wetland cells in attempt to keep the habitat alive.

(above) Pathways guide visitors through Rio Bosque.

John Sproul

(below) Lush, green vegetation bordered this Rio Bosque channel in 2002.

A new well near the Visitor Center provides additional water to Rio Bosque’s old river channel. EPWU installed 200 feet of pipe for the project and covered the cost of the drilling, electrical improvements and installation of the pump. Green technology is being used in two other drought-affected areas. EPWU designed wells equipped with windmills to pump water for the sites and coordinated with UTEP on the location of each well. A new 6,160-foot pipeline will carry

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treated water from the Bustamante Plant to the wetlands. The line can convey up to 2.8 million gallons per day of treated water to Rio Bosque. The project will be completed by the end of 2014. The U.S. Army Corps of Engineers is studying the feasibility of an ecosystem restoration project. Scientists, engineers and economists will be involved in the study, and public meetings will be held to solicit community input. The project would provide additional water for the wetland and habitat, but there would also be recreational, educational and research benefits. If the study is successful, the Corps of Engineers will provide funding for construction. The grant would require a 50/50 match. The Corps will complete the feasibility study and planning in 2015 and give EPWU its recommendations on the restoration project in 2016.

The Glen Campbell Pond reduces flooding in east El Paso.

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The stormwater system was tested when more than 3 inches of rain fell in the second week of September. The facilities worked well in most areas of the city, although motorists were temporarily inconvenienced by flooding along Interstate-10. More than 100 drainage projects are listed in El Paso’s Stormwater Master Plan. Several projects were among those tested, including the Northeast Channel No. 2, which moved thousands of gallons of runoff from the Franklin Mountains. Projects in East and Central El Paso diverted water from the streets, and the Saipan-Ledo Park Pond protected properties that routinely flooded in previous years. In 2013, EPWU completed construction of the Gateway Pond and several restoration projects, including the Copper Queen, Pellicano, and Glen Campbell Ponds; and the O’Keefe Outfall Culvert. Plaza

Redonda and other localized flooding projects kept stormwater off the streets. Projects under construction but not completed, include the Resler Canyon Outfall repair and Hillside Drive drainage improvements. At Morenci Pond in Central El Paso, construction was also underway. Although drainage has improved in the central core of the city, more projects must be completed to alleviate flooding on I-10. This includes two pump stations, three more ponds, and pipelines. Nearly $60 million in projects are needed to withstand a 100-year storm. Meanwhile, we’ve submitted a Letter of Map Revision to FEMA to document improvements in Northeast El Paso. If approved, hundreds of homes would no longer be required to pay for flood insurance.

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(above) Crews remove debris from the Northeast Channel so that stormwater flows freely during rain events.

(below) The Saipan-Ledo Park Pond withstood heavy rain in September. The pond filled and overflowed into the park as designed.

Customer Service workers use computers and mobile printers to get real-time information.

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EPWU is committed to providing excellent service, and new initiatives in the Customer Service Department have had a noticeable result. Meter Reading A new smartphone system has streamlined the meter reading process. Employees can text or talk to enter readings, and they are notified immediately when readings are abnormal. A second trip is no longer required. The meter readers use the phones’ camera and GPS capabilities document the information.

orders cut down on paperwork and provide real-time information. The work order and billing systems integrate seamlessly. Dispatchers no longer use radios to update payment information, and crews use the laptops to update orders from the field. Mobile work orders have boosted the level of service by increasing overall efficiency.

Smartphone photos certify meter tampering and document obstructions that prevent readings. The push-to-talk feature is used to communicate with crews in the field.

Customer Service Center Providing staff with dual monitors is one of several initiatives being implemented at the Customer Service Call Center. EPWU is expanding the Call Center hours and implementing other recommendations from an overall Center assessment.

Mobile Work Orders Laptop computers and mobile printers have replaced paper work orders for Field Customer Service and Meter Shop workers. Mobile work

The utility will also implement realtime processing for payment agencies. These initiatives will improve the Call Center’s efficiency and reduce call wait time.

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(above) More than 30,000 customers visit the Customer Service Center annually.

(below) Field Customer Service and Meter Shop workers were trained to use mobile work orders.

Parents and students get tips for science projects at Science Fair Blast-Off.

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Protecting Birds and Wildlife Canals deliver water to agricultural land for irrigation and collect stormwater runoff from El Paso’s neighborhoods. But while their primary purpose is for drainage and transporting water, birds, plants and wildlife make agricultural canals their home. Sediment and vegetation must be cleared to reduce fire hazards and keep water flowing. A new policy ensures that the maintenance does not disturb wildlife. The policy limits the use of loud equipment when birds are nesting. Routine maintenance is still permitted throughout the year. EPWU’s environmental planner assesses areas that have exotic plants and wildlife before any maintenance begins. The policy also specifies that vegetation should be left on the slope of canals or ponds for erosion control. Serving Colonias El Paso Water Utilities is working to bring water and wastewater service to unincorporated communities beyond the city limits. Projects are underway in Montana Vista, Turf Estates and Colonia Revolución.

EPWU is working with an engineering firm to plan a wastewater collection and treatment system for Montana Vista. Residents are currently using septic tanks and other on-site sewage facilities, which raises health and sanitation concerns. EPWU, with the cooperation of El Paso County, applied for funding through the Economically Distressed Areas Program. The application is for planning and preliminary engineering design. The Texas Department of State Health Services is surveying Montana Vista residents to determine if the unsanitary conditions meet public health nuisance criteria. The project will be eligible for 100 percent grant funding if health nuisance conditions exist throughout the project area. Although a new water system was installed in the Turf Estates subdivision, the residents’ on-site sewage facilities are not in compliance

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Colonia Revolución residents and dignitaries held a groundbreaking ceremony for a new water system.

with Health Department standards. Residents have complained about odors and the related health effects. EPWU and the County are collaborating to provide wastewater service to the subdivision. An engineering firm is designing the wastewater system, and a grant application has been submitted for construction.

(above) Students activate the H2O Together drinking water fountain during the annual Water Festival at the TecH2O Center.

(below) EPWU hydration stations were popular at the Neon Desert Music Festival. Staff offered free water bottles, free water and conservation tips.

A fall groundbreaking ceremony marked a key milestone for Colonia Revolución. Several utilities serve surrounding subdivisions, but none provide water service to Colonia Revolución. Residents buy drinking water. Water for other uses was stored in tanks outside their homes. Bringing water service to the community is a collaborative effort. USDA Rural Development funded the project; El Paso County applied for the funds. EPWU is providing construction management services and will provide wholesale water

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service to the community. Learning about Water The award-winning Less is the New More campaign was very effective in reminding residents to conserve water. The bilingual campaign combined paid advertising, social media and the website to reinforce the odd/even watering schedule and provide tips for saving water in and around the home. The campaign helped reduce water use in 2012 and again in 2013. Average per person water use fell from 134 gallons per day in 2012 to 130 gallons per day in 2013. The H2O Together campaign features a drinking water fountain and people working together to get the water flowing. The tagline “Working together means water forever” is a reminder that a sustainable water future depends on the collaborative efforts of the community and EPWU.

In addition to the traditional advertising, the campaign included digital ads that allowed viewers to interact with a virtual water fountain. All campaign materials, including social media, included the H2O Together web address or provided direct links to H2OTogether.org. More than 4,400 people visited the website during the eight-week campaign. Visits to EPWU’s Facebook page increased by 278 percent. Keyhole Gardens The TecH2O Water Resources Learning Center teaches visitors about the Chihuahuan Desert and its resources. One of the newest projects demonstrates keyhole gardens

and rainwater harvesting techniques. Keyhole gardens are raised beds that use leaves, food scraps and other organic matter for composting. The beds are shaped like keyholes for access to the plants. The TecH2O Center garden shows homeowners an inexpensive way to create urban green spaces while reducing solid waste in landfills by composting. The plants are irrigated with rainwater, which reduces water use. The gardens can be planted with fruits, vegetables, small trees and shrubs. TecH2O offers workshops on rainwater harvesting and landscaping techniques.

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Plants in the keyhole garden are fertilized with nutrients generated by composting.

Public Service Board El Paso Water Utilities A Component Unit of the City of El Paso Enterprise Funds - Statement of Net Position February 28, 2013 Water & Wastewater Municipal Drainage Utility Fund Utility Fund Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 20,268,842 $ 4,933,570 $ — $ 25,202,412 Investments 2,891,206 — — 2,891,206 Accounts receivable - customers 16,167,271 873,855 — 17,041,126 Accounts receivable - other 653,699 7,582 — 661,281 Accrued interest receivable 234,468 136,077 — 370,545 Due from Water and Wastewater Utility — 339,396 (339,396 ) — Inventory - materials and supplies 1,772,242 — — 1,772,242 Other current assets 289,145 — — 289,145 Prepaid expenses 1,921,004 — — 1,921,004 Restricted current assets: Restricted for bond requirements: Cash and cash equivalents 35,194,988 4,523,722 — 39,718,710 Investments 18,478,376 890,035 — 19,368,411 Unamortized bond issue expense 385,776 33,359 — 419,135 Restricted for construction and improvements: Cash and cash equivalents 70,307,086 32,466,892 — 102,773,978 Investments 14,530,887 18,366,068 — 32,896,955 Accounts receivable government grants 787,557 — — 787,557 Notes receivable 95,973 — — 95,973 Total current assets 183,978,520 62,570,556 (339,396 ) 246,209,680 Noncurrent assets: Investments 5,821,764 — — 5,821,764 Restricted noncurrent assets: Restricted for bond requirements: Investments 7,424,385 1,023,809 — 8,448,194 Unamortized bond issue expense 4,948,851 532,436 — 5,481,287 Restricted for construction and improvements: Investments 2,787,982 1,317,813 — 4,105,795 Capital assets: Water and Wastewater Utility capital assets 1,773,651,959 — — 1,773,651,959 Municipal Drainage Utility capital assets — 46,402,321 — 46,402,321 Land and right of way 71,003,959 4,852,158 — 75,856,117 Construction work in progress 58,084,002 18,626,370 — 76,710,372 Less accumulated depreciation (760,658,889 ) (7,747,760 ) — (768,406,649 ) Total capital assets (net of accumulated depreciation) 1,142,081,031 62,133,089 — 1,204,214,120 Total noncurrent assets 1,163,064,013 65,007,147 — 1,228,071,160



Total assets



$ 1,347,042,533

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$

127,577,703

$ (339,396 ) $ 1,474,280,840

Public Service Board El Paso Water Utilities A Component Unit of the City of El Paso Enterprise Funds - Statement of Net Position February 28, 2013 Water & Wastewater Municipal Drainage Utility Fund Utility Fund Eliminations Total LIABILITIES Current liabilities: Accounts payable $ 2,347,477 $ 228,124 $ — $ 2,575,601 Contributions and Solid Waste Management collections due to City of El Paso 4,669,505 — — 4,669,505 Customer deposits 8,398,336 — — 8,398,336 Accrued vacation payable 1,626,310 53,697 — 1,680,007 Accrued payroll and benefits 1,409,094 83,481 — 1,492,575 Due to Municipal Drainage Utility 339,396 — (339,396 ) — Retainage payable on operating contracts — 24,090 — 24,090 Unearned revenue on land leases 278,794 8,750 — 287,544 Other current liabilities 370,545 — — 370,545 Self insurance worker’s compensation and health claims 356,765 — — 356,765 Other governments payable - current 123,268 — — 123,268 Current liabilities payable from restricted assets: Revenue bonds payable and unamortized premiums, gains, net of discounts and losses on refunding 26,506,806 2,405,259 — 28,912,065 Accrued interest on revenue bonds and commercial paper 9,736,455 1,663,255 — 11,399,710 Accounts payable 12,803,476 587,834 — 13,391,310 Land notes payable 764,375 — — 764,375 Land notes interest payable 53,562 — — 53,562 Customer advances for construction 241,800 — — 241,800 Retainage payable on construction contracts 1,361,082 316,710 — 1,677,792 Total current liabilities 71,387,046 5,371,200 (339,396 ) 76,418,850 Noncurrent liabilities: Revenue bonds payable and unamortized premiums, gains, net of discounts and losses on refunding 495,339,430 64,216,668 — 559,556,098 Land notes payable 4,159,088 — — 4,159,088 Other governments payable 2,760,792 — — 2,760,792 Commercial paper notes 8,000,000 — — 8,000,000 Other Post-Employment Benefits 5,886,619 145,992 — 6,032,611 Accrued vacation payable 1,219,870 43,408 — 1,263,278 Self insurance worker’s compensation claims 912,353 — — 912,353 Total noncurrent liabilities 518,278,152 64,406,068 — 582,684,220 Total liabilities 589,665,198 69,777,268 (339,396 ) 659,103,070 NET POSITION Restricted: Restricted for debt service 56,695,920 5,340,106 — 62,036,026 Restricted for construction and improvements 22,320,145 4,040,922 — 26,361,067 Total restricted 79,016,065 9,381,028 — 88,397,093 Net investment in capital assets 656,156,693 42,716,469 — 698,873,162 Unrestricted 22,204,577 5,702,938 — 27,907,515 Total net position 757,377,335 57,800,435 — 815,177,770 Total liabilities and net position $ 1,347,042,533 $ 127,577,703 $ (339,396 ) $1,474,280,840

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Public Service Board El Paso Water Utilities A Component Unit of the City of El Paso Enterprise Funds - Statement of Revenues, Expenses, and Changes in Net Position February 28, 2013 Water & Wastewater Municipal Drainage Utility Fund Utility Fund Eliminations Total Operating revenues: Water $ 91,787,975 $ — $ — $ 91,787,975 Water supply replacement charge 18,410,830 — — 18,410,830 Reclaimed water 2,802,403 — — 2,802,403 Wastewater 54,468,286 — — 54,468,286 Drainage fees — 15,066,412 (104,760 ) 14,961,652 Customer connection fees 5,105,632 — — 5,105,632 Billing fees - City Solid Waste Management 599,350 256,864 — 856,214 Rent revenue 1,929,652 — (24,000 ) 1,905,652 Other operating revenue 1,658,802 363,864 — 2,022,666 Total operating revenues 176,762,930 15,687,140 (128,760 ) 192,321,310 Operating expenses: Operations and maintenance - water & reclaimed water 40,404,571 — (39,081 ) 40,365,490 Operations and maintenance - wastewater 22,217,013 — (52,372 ) 22,164,641 General, administrative and engineering expenses 20,861,053 — 1,462,014 22,323,067 Operations and maintenance - drainage — 4,563,460 (27,321 ) 4,536,139 Indirect cost allocation — 1,472,000 (1,472,000 ) — Other operating expenses 1,939,592 — — 1,939,592 Other Post-Employment Benefits expense 831,429 57,938 — 889,367 Depreciation and amortization 50,506,971 1,664,139 — 52,171,110 Payment to City of El Paso per bond covenants 10,382,694 — — 10,382,694 Total operating expenses 147,143,323 7,757,537 (128,760 ) 154,772,100 Operating income 29,619,607 7,929,603 — 37,549,210 Nonoperating revenues (expenses): Interest earnings and net change in fair value of investments IRS tax credit for Build America Bonds Gain on land assets converted by sale Gain on sale of miscellaneous assets Interest of long term debt Total nonoperating expenses Income in net position, before contributions Federal grant contributions Capital non-federal grant contributions Total contributions Change in net position Total net position - beginning Total net position - ending $

258,250 104,278 249,428 934,250 2,704,348 793,398 122,773 27,205 (19,537,477 ) (2,514,924 ) (16,202,678 ) (655,793 ) 13,416,929 7,273,810 694,852 — 11,663,713 — 12,358,565 — 25,775,494 7,273,810 7 31,601,841 50,526,625 757,377,335 $ 57,800,435 $

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— — — — — — — — — — — — — $

362,528 1,183,678 3,497,746 149,978 (22,052,401 ) (16,858,471 ) 20,690,739 694,852 11,663,713 12,358,565 33,049,304 782,128,466 815,177,770

Financials Funding of Capital Acquisitions & Improvements

Water Pumped vs. Water Billed

$500

50 40

Billed

Const. & Imp. Restricted Assets Long-term Debt

2013

2012

2011

2010

2009

0

2008

Acquisition of Capital Assets

20122

2013

2012

2011

2010

2009

2008

$0

10

2007

$100

20

2006

$200

30

2005

$300

2004

Billion Gallons

Millions

$400

Pumped

Calendar Year

Fiscal Year ending February of year shown Does not include Stormwater Utility

Average Annual Water & Wastewater Revenue - Per Customer

Retail & Wholesale Water & Wastewater Customer Growth

10 Years

10 Years

220,000 $450

200,000

$400 180,000

$350 $300

160,000

$250 $200

Water

Wastewater

Water

Fiscal Year ending February of year shown

Calendar Year

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Wastewater

2013

2012

2011

2010

2009

2008

2007



2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2006

120,000

$100

2005

$150

2004

140,000

Public Service Board El Paso Water Utilities A Component Unit of the City of El Paso Enterprise Funds - Statement of Cash Flows February 28, 2013 Water & Wastewater Municipal Drainage Utility Fund Utility Fund Eliminations Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 178,469,041 $ 15,503,936 $ — $ 193,972,977 Cash received from Municipal Drainage Utility 1,779,349 — (1,779,349 ) — Cash received from Water and Wastewater Utility — 104,760 (104,760 ) — Solid Waste Management fees collected for the City of El Paso 49,402,536 — — 49,402,536 Cash payments to suppliers for goods and services (50,367,318 ) (3,612,138 ) — (53,979,456 ) Cash payments to employees for services (35,869,898 ) (727,804 ) — (36,597,702 ) Solid Waste Management fees paid to the City of El Paso (49,409,566 ) — — (49,409,566 ) Payments to City of El Paso per bond covenants (10,354,774 ) — — (10,354,774 ) Cash payments to Municipal Drainage Utility (104,760 ) — 104,760 — Cash payments to Water and Wastewater Utility — (1,779,349 ) 1,779,349 — Net cash provided by operating activities 83,544,610 9,489,405 — 93,034,015 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from: Revenue bonds 75,715,000 14,075,000 — 89,790,000 Premiums received on revenue bonds 10,691,701 905,911 — 11,597,612 Commercial paper 10,000,000 — — 10,000,000 Cash receipts from grants 4,877,464 — — 4,877,464 Acquisition and construction of capital grants (1,300,565 ) — — (1,300,565 ) Acquisition and construction of capital assets net of disposals (49,320,313 ) (8,309,541 ) — (57,629,854 ) Refunding revenue bonds (43,375,000 ) — — (43,375,000 ) Refunding commercial paper (15,000,000 ) — — (15,000,000 ) Principal payments on revenue bonds (22,935,000 ) (1,850,000 ) — (24,785,000 ) Interest and fees on revenue bonds and commercial paper (23,110,363 ) (2,469,299 ) — (25,579,662 ) IRS tax credit on Build America Bonds 249,428 934,250 — 1,183,678 Principal payments on land notes payable (728,433 ) — — (728,433 ) Interest payments on notes and other long term debt (286,442 ) — — (286,442 ) Proceeds from sale of assets net of related expenses 299,481 820,603 — 1,120,084 Net cash provided (used) by capital and related financing activities (54,223,042 ) 4,106,924 — (50,116,118 ) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from the sale and maturities of investment securities 65,544,933 24,459,302 — 90,004,235 Purchase of investment securities (73,585,991 ) (26,158,179 ) — (99,744,170 ) Interest received on investment securities 375,971 68,835 — 444,806 Net cash used by investing activities (7,665,087 ) (1,630,042 ) — (9,295,129 ) Net increase in cash and cash equivalents (21,656,481 ) 11,966,287 — (33,622,768 ) Cash and cash equivalents: Beginning of year 104,114,435 29,957,897 — 134,072,332 End of year $ 125,770,916 $ 41,924,184 $ — $ 167,695,100

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Public Service Board El Paso Water Utilities A Component Unit of the City of El Paso Enterprise Funds - Statement of Cash Flows February 28, 2013

Water & Wastewater Municipal Drainage Utility Fund Utility Fund Eliminations Total

Reconciliation of operating income to net cash provided by operating activities: Operating income $ 29,619,607 $ 7,929,603 $ — $ 37,549,210 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 49,646,395 1,635,231 — 51,281,626 Amortization 860,576 28,908 — 889,484 (Increase) decrease in assets: Accounts receivable (297,125 ) (78,444 ) — (375,569 ) Due from Water and Wastewater Utility — (275,344 ) 275,344 — Inventory 143,411 — — 143,411 Prepaid expenses 9,572 — — 9,572 Other current assets (100,716 ) — — (100,716 ) Increase (decrease) in liabilities: Accounts payable (23,204 ) 168,530 — 145,326 Other current liabilities 2,084,040 — — 2,084,040 Due to Municipal Drainage Utility 275,344 — (275,344 ) — Accrued vacation payable 255,293 (2,119 ) — 253,174 Accrued payroll and benefits 238,479 21,058 — 259,537 Other Post-Employment Benefits 831,429 57,938 — 889,367 Retainage payable on operating contracts — 4,044 — 4,044 Self insurance claims 1,509 — — 1,509 Net cash provided by operating activities $ 83,544,610 $ 9,489,405 $ — $ 93,034,015 Noncash investing, capital, and financing activities: Contribution in aid of construction $ 11,058,000 $ — $ — $ 11,058,000 Decrease in accounts receivable capital grants (3,576,899 ) — — (3,576,899 ) Change in fair value of investments 114,029 918 — 114,947 $ 7,595,130 $ 918 $ — $ 7,596,048

25

Public Service Board El Paso Water Utilities A Component Unit of the City of El Paso Water and Wastewater Utility Fund

2011

2012

2013 FINANCIAL DATA $180,097,729 Total Revenue 94,590,378 Water System Income 54,468,286 Wastewater System Income 30,789,637 Miscellaneous Revenue (Interest, etc.) 10,382,694 Paid to City in Lieu of Taxes 13,416,929 Income (Loss) before Contributions 11,663,713 Capital Contributions 441.12 Water Revenue per Customer 273.03 Wastewater Revenue per Customer 814 Number of Employees - Annual Average 50,620,878 Expenditures for Plant Additions 492,785,000 Bonded Debt 8,000,000 Outstanding Commercial Paper 2.03 Debt Service Coverage



FINANCIAL RATIOS 2.58 Current Ratio (Current Assets/Current Liabilities) Acid Test Ratio (Cash & Cash Equivalents/ 1.76 Current Liabilities) Operating Ratio (O&M-depreciation/Total 0.55 Operating Revenue) Net Take-Down Ratio (Total Operating Income 0.44 +Depreciation)/Gross Revenue) 0.44 Total Liabilities to Total Assets Debt to Equity Ratio (Bonds payable+ 0.66 Commercial paper notes)/Equity) Debt Ratio (Bonds payable+Commercial 0.37 paper notes/Total Assets) Debt Service Safety Margin (Net Operating Income-Debt Service)/(Total Operating 0.22 Revenue+Interest Earnings) Current Restricted Assets/Current 2.72 Restricted Liabilities

$168,954,309 89,315,635 51,563,606 28,075,068 9,930,669 5,227,358 17,169,370 429.76 266.71 816 $42,998,857 497,720,000 19,000,000 1.86

$178,090,062 94,686,408 53,711,156 29,443,070 10,509,152 10,593,032 9,632,021 449.04 273.96 819 $43,121,842 483,380,000 13,000,000 1.88

$165,064,597 84,211,344 51,567,727 29,285,526 9,613,832 450,503 7,943,164 416.58 274.31 810 $30,188,754 504,971,000 9,000,000 1.58



2006 Restated

2007

2008

2009

2010

2005 Restated

2004 Restated

$166,857,980 82,144,429 50,233,301 34,480,250 9,301,374 7,328,369 15,465,512 414.06 273.02 784 $56,845,392 519,273,000 9,000,000 1.95

$153,870,696 76,512,872 46,246,662 31,111,162 8,601,624 1,469,119 9,450,817 391.59 255.80 693 $110,012,539 465,542,000 14,000,000 1.61

$145,522,699 70,329,517 45,348,889 29,844,293 7,980,845 4,958,666 29,829,315 366.59 254.99 708 $120,193,891 436,375,000 21,000,000 1.67

$162,759,681 75,286,185 43,003,469 44,470,027 9,330,128 36,711,635 14,761,857 371.66 261.15 663 $115,683,182 402,017,000 40,000,000 2.34

$136,040,710 68,092,152 44,207,686 23,740,872 7,782,955 16,983,714 11,196,302 311.03 244.61 666 $91,905,919 359,719,000 15,000,000 2.23

$114,491,777 55,536,943 40,252,295 18,702,539 6,164,963 2,595,500 11,753,352 289.90 243.86 652 $74,364,347 360,052,000 10,000,000 1.77

2.25

2.56

2.58

2.51

1.66

2.02

3.05

1.76

2.98

1.57

1.80

1.75

1.64

1.13

1.55

1.47

1.31

0.17

0.55

0.55

0.59

0.58

0.60

0.61

0.53

0.53

0.60

0.44 0.44

0.45 0.45

0.40 0.46

0.41 0.46

0.39 0.46

0.38 0.45

0.40 0.46

0.46 0.44

0.40 0.45

0.68

0.73

0.75

0.78

0.74

0.71

0.73

0.68

0.71

0.38

0.40

0.41

0.42

0.40

0.39

0.40

0.38

0.39

0.19

0.19

0.13

0.18

0.10

0.11

0.24

0.25

0.16

2.17

2.56

2.61

2.77

1.74

2.10

3.46

2.83

4.03

Fiscal Year March 1 thru last day of February of year shown.

26

Public Service Board El Paso Water Utilities A Component Unit of the City of El Paso Water and Wastewater Utility Fund

WATER PRODUCTION AND USAGE DATA* Water Customers Retail at End of Year Water Customers Retail & Wholesale at End of Year Water Pumped - Million Gallons Water Metered - Million Gallons - Retail Water Metered - Million Gallons - (Retail/Wholesale) Percent of Water Billed vs. Water Pumped (R/W) Annual Billed Water per Customer Retail - 1000 Gallons Annual Billed Water per Customer (R/W) - 1000 Gallons Average Daily Water Demand - Million Gallons Maximum Daily Water Demand - Million Gallons Minimum Daily Water Demand - Million Gallons Daily Average Consumption in Peak Week - Million Gallons Peak Day Miles of Water Mains Installed Miles of Water Mains Replaced or Abandoned Miles of Water Mains in Place Number of Fire Hydrants Installed Number of Fire Hydrants in Place WASTEWATER SYSTEM DATA* Wastewater Customers Retail & Wholesale at End of Year Average Daily Flow - Million Gallons Maximum Daily Flow - Million Gallons Minimum Daily Flow - Million Gallons Average Daily Flow per Customer - Gallons Miles of Wastewater Line Installed Miles of Wastewater Line in Place

2012

2011

2010

194,274 214,254 38,820 33,669 36,322 94% 173 170 104.3 163.2 60.6 152.5 June 26 37.75 7.50 2,561 102 10,191

191,625 210,987 38,833 34,336 37,022 95% 179 175 106.2 163.5 61.2 155.6 June 29 35.34 10.72 2,530 136 10,089

188,927 207,563 37,348 31,570 34,407 92% 167 166 102.4 158.5 62.7 147.7 June 18 21.68 5.14 2,506 168 9,953

2009

2008

2007

2006

185,062 202,150 37,067 31,871 34,147 92% 172 169 101.6 152.6 60.7 138.7 July 14 28.69 7.74 2,489 226 9,785

182,315 198,390 35,476 30,481 32,069 90% 167 162 96.4 158.7 58.2 144.0 June 27 38.84 2.94 2,468 287 9,559

178,031 195,389 35,636 31,123 32,284 91% 175 165 97.5 154.8 59.7 138.0 June 26 42.82 12.75 2,432 270 9,272

174,922 191,849 35,457 30,600 32,595 92% 175 170 97.0 162.7 54.6 144.0 June 21 22.00 2.70 2,402 435 9,002

2005

2004

2003

171,607 187,794 35,173 30,510 32,565 93% 178 173 96.4 162.3 55.4 152.2 July 6 34.10 4.05 2,383 152 8,567

167,753 183,210 34,663 30,066 32,042 92% 179 175 95.0 156.4 60.2 141.5 June 16 60.87 11.13 2,354 208 8,415

162,810 178,561 36,999 31,805 33,898 92% 195 190 101.7 161.8 60.9 158.2 July 23 49.21 7.03 2,303 180 8,207

199,181 61.76 67.16 56.57 310 25.00 2,210

195,875 61.53 68.10 52.30 314 34.96 2,185

192,765 60.35 68.62 51.52 313 30.00 2,150

187,992 58.66 72.68 50.79 312 37.00 2,120

*Calendar Year

27

183,990 58.23 82.31 51.91 316 32.24 2,083

180,795 57.98 66.05 51.42 321 29.73 2,051

177,845 58.23 78.62 51.63 327 28.00 2,021

174,195 55.85 59.24 47.05 321 26.10 1,993

169,283 58.15 66.63 49.99 344 53.64 1,967



164,555 60.02 70.62 48.81 365 38.68 1,914

Public Service Board El Paso Water Utilities A Component Unit of the City of El Paso Stormwater Utility Fund

2010* 2009* 2008* 2011* 2012* SELECTED FINANCIAL RATIOS FINANCIAL DATA 17,546,271 16,494,793 16,505,456 15,615,742 17,417,842 Total Drainage Revenue 5,975,720 5,857,191 6,575,449 6,057,512 6,147,697 Residential Drainage Revenue 8,876,317 8,815,413 10,797,716 8,881,591 8,918,715 Non Residential Drainage Revenue 438,037 456,537 466,187 620,728 Other Operating Revenue 217,392 65,227 44,677 122,488 Interest Revenue 104,278 997,990 421,374 967,015 934,250 IRS Tax Credit for Build America Bonds 820,603 Gain on Sale of Land and Assets 5,359,572 5,579,012 8,390,394 5,998,229 7,237,810 Income before Contributions 508,814 598,616 24,091,448 Capital Contributions 85.14 85.81 99.79 84.99 85.40 Operating Drainage Revenue per Customer 65,743,000 53,518,000 55,163,000 55,163,000 Bonded Debt 3.73 N/A N/A 2.26 Debt Service Coverage 2.35 FINANCIAL RATIOS 8.00 11.65 Current Ratio (Current Assets/Current Liabilities) 4.88 7.81 Acid Test Ratio (Cash & Cash Equivalents/Current Liabilities) 0.42 Operating Ratio (O&M-depreciation/Total Operating Revenue) 0.39 Net Take-Down Ratio (Total Operating Income+Depreciation) 0.54 0.55 /Gross Revenue) 0.53 0.55 Total Liabilities to Total Assets 1.06 1.14 Debt to Equity Ratio (Bonds payable)/Equity) 0.49 0.52 Debt to Ratio (Bonds payable/Total Assets) Debt Service Safety Margin (Net Operating Income-Debt Service) 0.26 0.28 /(Total Operating Revenue+Interest Earnings) 7.74 11.32 Current Restricted Assets/Current Restricted Liabilities

11.43 6.42 0.44

32.03 20.38 0.47

5.40 4.08 0.43

0.52 0.57 1.24 0.53

0.52 0.60 1.43 0.58

0.56 0.03 -

0.36 11.90

0.49 39.24

0.56 N/A

310 904 650 32 2,430 1,200 74 30 43 15 146 15 6,094 500

277 983 500 38 2,390 1,000 68 15 39 20 100 2 4,100 100

277 983 3,429 38 2,390 1,915 68 30 39 25 100 2 4,100 -

SELECTED OPERATIONS AND STATISTICAL DATA DRAINAGE OPERATIONS 361 361 Number of Ponds 1,020 904 Acres of Ponds inventoried 461 Acres of Ponds cleaned 917 37 37 Number of Dams/Basins 2,417 Acres of Dams/Basins inventoried 2,430 263 Acres of Dams/Basins cleaned 463 72 Miles of Channels inventoried 74 44 Miles of Channels cleaned 27 39 Miles of Agricultural Drains inventoried 43 17 Miles of Agricultural Drains cleaned 39 280 Miles of Drainage Conduits inventoried 146 2 Miles of Drainage Conduits cleaned 12 6,359 6,094 Drainage Inlets inventoried 116 373 Drainage Inlets cleaned *Fiscal Year March 1 of year shown thru end of February of the following year. Note: The Stormwater Utility was created and started operations during fiscal year 2008

28





E S

Budgeted Number of Employees Stormwater Support Staff Added

900

x

e

c

u

t

a

ff

t

i

v

e

John E. Balliew, P.E. President/CEO [email protected]

800

Marcela Navarrete, C.P.A. Vice President Strategic, Financial & Management Services [email protected]

700

Daniel Avila, P.E. Vice President Operations & Technical Services (Retired)

2013

2012

2011

2009

500

2010

600

Budgeted Employees per Thousand Customers 5

Christina Montoya Vice President Communications & Marketing [email protected]

Does not include Stormwater support staff

Robert D. Andron, J.D. General Counsel [email protected]

4

2013

2012

2011

2010

2009

3

Arturo Duran Chief Financial Officer [email protected] Fernando Rico, P.E. Chief Operations Officer [email protected]

Water & Wastewater Power Costs

Hector Gonzalez Government Affairs Manager [email protected]

$20

Paula Lisko-Apodaca Executive Services Manager [email protected]

Million

$15

Georgette Webber Executive Secretary [email protected] 2013

2012

2011

2010

$5

2009

$10

29

Mailing Address P.O. Box 511 El Paso, Texas 79961 Physical Address 1154 Hawkins Blvd. El Paso, Texas 79925 915.594.5500 epwu.org