2018 Corporate Operating Plan

OPPD’s 2018 Corporate Operating Plan (COP) is up for approval at our December 14 board meeting. I wanted to provide a very brief synopsis, and I hope that anyone with questions or comments will contact me at any time. The board’s first access to the COP was at our November 16 board meeting when we received a copy and CFO Javier Fernandez presented the highlights. He did a great job of hitting the high points. If you’re interested, you can view his presentation here (runs from 0:40:00 to 1:22:00), and link to slide deck here.

At roughly 1:18 during the presentation I asked Javier what he views as the biggest risks to OPPD achieving what’s planned in the COP. His answer struck me in that the first risk he mentioned was the potential negative consequences of the tax reform/cut plan currently being considered at the federal level. His answer is worth a listen.

In short, things are looking great with the COP.  Here is what I see as the highlights:

  • Rates. No general rate increase. Yes, fixed fees will go up as planned, but the overall rate structure will result in no general increase.
  • Rate Stabilization Fund. In 2017, $8 million will be deposited bringing the total up to our target of $50 million.
  • Decommissioning Funding. Also in 2017, $24 million will go into the Decommissioning and Benefit Reserve Fund, which is the first deposit made into the account. Projections show this fund growing to $33 million in 2018. This is aside from two other decommissioning funds currently on the books. Generally speaking, decommissioning funding is good (projected to be $449 million in 2018).
  • Capital Expenditures. All capital expenditures in 2017 and projected capital expenditures in 2018 will be funded with cash. No additional debt is good.
  • Net Income. Projected to be $76 million in 2017 and $80 million in 2018. (This is after revenue deferrals of $32 million and $9 million respectively).
  • Renewables. We’re expected to be over 30% in 2018. Looking forward (not covered in 2018 COP) we have new wind projects coming online in 2019 and 2020 getting us to 50%.

There is much, much more to dig through if one is so inclined. I’ve spent quite a bit of time sifting, and Director McGuire and I had a good meeting with Javier and other members of management to discuss the plan.

You can provide comments here or just shoot me an email at cm@craigmoody.org.

Onward and upward.