Record low water sales in 2023 drives cautious spending budget for 2024.

In the last 47 years, only in 1991 did Crestview sell less water than it did in the fiscal year ending November 30, 2023.  Unit sales were 32 percent, and revenues were 43 percent, under budget because of the extraordinary amount of rainfall.  Aware that FY2024 could also be very rainy, the Board adopted a cautious FY2024 spending budget with the stipulation that it will be reviewed at least quarterly.  The question whether the rate schedule will be changed was deferred pending a report from a consultant, probably in January.

It is impossible to budget Crestview revenue accurately because almost all of it comes from selling water.  In the 47 years for which Crestview has published records, annual water sales ranged from 177 million gallons in 1991 to 396 MG in 2007.  The average (red line in the chart below) has been 300 MG.  Prior management adopted the practice of budgeting sales at the average of the most recent 4 years (green line in the chart).

Actual sales in 2023 were 183 MG, and the 4-year moving average of sales is 260 MG. After much discussion, including of the expected El Nino, the Board budgeted sales of 196 MG in FY2024, which is 7 percent more than actual sales in FY2023, 30 percent less than the 4-year moving average, and 35 percent less than the 47-year average.  Budgeted revenues are $1.558 million, which will cover $1,293 of operating expenses and $0.266 million for (undesignated) capital projects.  (Since accrual-based expenses are budgeted at $1.477 million, there would be a profit of $81,000 on an accrual basis.)

This budget is intended to keep Crestview financially sound if we have another exceptionally rainy year and to cover only some preliminary spending on capital projects.  The Board discussed the extreme vulnerability Crestview has to low water sales volumes, which can be caused by too much rain locally (driving down demand) or not enough snow in Northern California (curtailing supply).  Crestview can manage expenses, cash reserves, and rates, but cannot manage water demand or supply.  Budgeting in future years is going to be challenging, especially if we are to spend millions of dollars on new wells, emergency generators, infrastructure replacements, and other things necessary for long-term viability. Furthermore, as our pumping allocations are gradually reduced by Fox Canyon Groundwater Management Agency according to its plan, Crestview will need to import more and more water from northern California at about $2,000 per acre-foot–compared with the $350 per acre-foot variable cost of pumping our own water.

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