2015 ANNUAL OPERATING AND FINANCIAL PLAN

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2015 ANNUAL OPERATING AND

FINANCIAL PLAN

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2015 Annual Operating and Financial Plan 1

EXECUTIVE SUMMARY

ABOUT THE ANNUAL OPERATING AND FINANCIAL PLAN The 2015 Budget was developed to achieve the outcomes most important to customers and the Utilities Board: competitive utility rates; safe, reliable service and excellent customer service. Further, the Budget supports the financial metrics necessary to maintain a healthy “AA” credit rating that helps keep customer rates competitive long term.

Colorado Springs Utilities’ comprehensive planning and budgeting process begins with the Utilities Board Strategic Plan to achieve their strategic outcomes of rates, reliability and relationships. Within the five year plan, key themes, strategic objectives and strategic initiatives identify important areas of resource focus. The Annual Operating and Financial Plan is year one of a five-year plan. The plan is a comprehensive look at the financial resources required to meet operational needs.

Colorado Springs Utilities’ goal is to make these operational and financial documents useful for multiple audiences; so the information is detailed in two views:

1. Service Overview: This view illustrates the expenses going into each service (electric, natural gas, water and wastewater) to determine rates. Financial statements can be linked to the total appropriation with the exception of the “other” category, which includes classified expense in various financial categories. All divisions contribute expense to each of the four services.

2. Division Overview: In this view, budgets are categorized by how the organization is functionally structured. Divisions include: Energy Services, Water Services, Customer and Corporate Services, Environment, Health and Safety, Planning and Finance, and Strategy and External Affairs. Financials presented include only operating expenses for the division.

Note that financial data in the division view is a restatement of operating expenses in the service view. So, adding Electric budget service to Energy Division budget figures, for example, will result in counting line items twice.

INTRODUCTION The utility industry is changing rapidly. For Colorado Springs Utilities to continue providing safe, reliable, competitively-priced services, we need to further align the organization with increasing demands and evolving operational practices. Colorado Springs Utilities is no different than many other energy and water utilities across the nation that are experiencing relatively flat sales, additional regulatory requirements and increasing capital and infrastructure needs. To successfully meet customer expectations, now and in the future, Colorado Springs Utilities will need to continue to innovate the delivery of utility services.

In 2014, Colorado Springs Utilities reduced nonlabor expenses due to reduced sales in water and electric services and significantly reduced the proposed 2015 Budget in both Operations and Maintenance and Capital expenses. This approved 2015 Budget reflects those reductions. All areas of the organization have contributed to the savings, which have been accomplished by evaluating service levels and prioritizing programs and projects.

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Through the Utilities Board-directed 5-year business service plan strategic initiative, Colorado Springs Utilities is using benchmarking, best practices and other internal and external input to further optimize our organization. In the initial five year financial analysis, leadership identified that approximately $35 million in sustainable operating cost reductions are needed by 2016 to keep customer rates competitive.

This will be accomplished by eliminating 100 positions over the next two years and continuing to reduce Operations and Maintenance and Capital expenses. Additional reductions are a tremendous challenge because of changes already made in how we operate in the midst of a weak economy and an essential, large capital program. However, we have a track record of finding new ways to work and do business in a thoughtful and proactive manner. Already, innovative solutions have been realized to deliver valued service at a reduced cost.

KEY FINANCIAL PLANNING FACTORS Integrated strategic and financial planning are critical elements of Colorado Springs Utilities’ business planning process. The Kaplan-Norton Balanced Scorecard model is used as the foundation for strategic business planning. The model translates strategies into operational objectives, initiatives and

performance targets to achieve desired outcomes that are measured and regularly monitored. Multi-year planning occurs in all aspects of Colorado Springs Utilities’ strategic plan, long-range resource plans, infrastructure plans and Operations and Maintenance plans. This planning is reflected in financial forecasts and the Annual Operating and Financial Plan.

Financial key planning factors in the 2015 Annual Budget:

• Relatively flat energy and water demand due to low customer growth and flat or decreasing per-customer usage is expected compared to 2014.

• Large capital investment is required to comply with power plant emissions regulations and natural gas safety rules. Capital expenditures for the Southern Delivery System; electric, gas and water distribution systems and wastewater collection are required to maintain reliable service. • Watershed management and water asset management.

• Nonfuel Operations and Maintenance costs for power plant maintenance.

• Fuel and purchased power costs and wholesale natural gas prices for distribution to customers.

TOTAL APPROPRIATIONS The 2015 Budget is $1,082.7 million, a decrease of $70.7 million, or 6.1 percent, from City Council’s Approved 2014 Budget. This decrease is primarily the result of lower capital expenditures largely driven by lower construction costs of the Southern Delivery System (SDS) water project. All increases and decreases are described in the detail that follows, and are in comparison to the 2014 Approved Budget.

Capital Improvements

Total capital costs for 2015 are $329.7 million and represent approximately 30 percent of the 2015 Budget. Capital costs are the primary drivers of the 2015 electric base rate increase. Capital

improvements are required to maintain and rehabilitate aging infrastructure in order to provide safe and reliable services to existing customers, to prepare for future demand, and to meet environmental and regulatory requirements.

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Total 2015 capital expenditures before accounting for Allowance for Funds Utilized During Construction (AFUDC) and capitalized interest will decrease by $88.2 million, or 22.6 percent from the 2014 Approved Budget.

• Water capital will decrease by $94.5 million. Phase I of the SDS project continues to represent a major portion of the water system capital investment during this planning period with the continued construction of the water treatment plant and pump stations and completion of construction of pipelines through 2016 when the pipeline is scheduled to be operational. Non-SDS capital expenditures will be limited to existing critical infrastructure needs for water mains, storage facilities, treatment plants, vehicle and equipment replacements, and Waldo Canyon fire-related restoration and recovery.

• Electric capital will increase by $9.7 million, primarily for funding emissions controls projects of $19.4 million, partially offset by decreased funding for plant, transmission, and distribution infrastructure, and vehicle and equipment replacements.

• Natural gas capital will decrease by $2.9 million, primarily due to fewer vehicle and equipment replacements compared to the 2014 Approved Budget, completion in 2014 of gas system upgrades for U.S. Air Force Academy privatized housing (100 percent reimbursed by USAFA), and compressed natural gas infrastructure.

• Wastewater capital increased $3.2 million, primarily to fund the Advanced Wastewater Treat project at the Las Vegas Water Resource Recovery Facility (a $1.0 million State grant for construction is expected to partially reimburse costs for this project) and replace old and high mileage vehicles and equipment. Also included is the continued rehabilitation of local collection system and creek crossings.

• Common capital to support all the services decreased by $3.8 million, primarily due to fewer vehicle and equipment replacements. The majority of the remaining decrease is associated with the completion of relocating the secondary data center and back-up Supervisory Control and Data Acquisition (SCADA) control center to the East Service Center in 2014.

Nonfuel Operations and Maintenance

Total Nonfuel Operations and Maintenance expenditures will decrease by $4.3 million, or 1.5 percent, from the 2014 Approved Budget primarily due to reduced maintenance for power plants.

• To maintain competitive compensation and attract and retain a quality workforce the labor and benefit package increased overall by $9.3 million, or 5 percent from the 2014 Approved Budget. The overall increase in base pay is estimated at 6 percent, with approximately 3 percent

allocated for merit increases based on individual performance plans, 2 percent increase in workforce needed for the Southern Delivery System, and 1 percent for normal operational base pay adjustments. Employee benefits will increase almost 4 percent from the 2014 Approved Budget.

• Maintenance for major power plants will decrease by $6.0 million as planned outages on Martin Drake Units 5 and 6 and Ray Nixon Unit 1 were completed in 2014.

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• Purchased water will decrease by $2.5 million from the 2014 Approved Budget due to 2,000 acre feet delivery through the Fountain Valley Authority System compared to 10,000 acre feet in the 2014 Approved Budget.

Fuel and Purchased Power

Fuel and purchased power will increase by $7.8 million, or 2.8 percent more than 2014. Natural gas for distribution will increase by $10 million over 2014 due to a strengthening natural gas market. In 2015 approximately 12 percent less MWh will be purchased off the market than in 2014. Natural gas

generation at the Front Range Power Plant is available for a lower price than we can purchase from the market in 2015.

Debt Service

Total debt service is planned to remain relatively flat with a decrease of $0.2 million or 0.2 percent from the 2014 Approved Budget primarily due to higher principal and interest payments associated with Water’s SDS capital project, offset by higher AFUDC and Capitalized Interest overheads applied to the project.

Transfers – Surplus Funds to the City

Total transfers – surplus funds to the City are planned to increase slightly by $0.8 million or 2.5 percent from the 2014 Approved Budget approved budget due to slightly higher electric and gas sales inside City limits. Transfers - Surplus Funds to City are in accordance with approved Resolution No. 131-10 dated August 10, 2010 at an electric surplus rate of $0.006173 per Kwh and a gas surplus rate per Mcf delivered at 14.65 psi of $0.391539.

OPERATIONAL RISKS OF BUDGET DEFERRALS AND DECREASES The 2015 Budget is a responsible balance between investing in infrastructure to maintain safe, reliable service and keeping rates as low as possible. After an extensive prioritization process, some

maintenance and rehabilitation projects have been decreased in scope or postponed to future years.

Electric Service's power plant maintenance has been moved from a two- to three-year schedule.

Water Services is managing risk by using cathodic protection to extend the life of the water mains. Water main replacement budgets have been reduced to moderate rate pressure while SDS is being constructed. Once the SDS project is completed, Utilities will be able to re-focus on water distribution replacements.

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BUDGET SUMMARY

The Colorado Springs Utilities Budget funds the priorities outlined in the Strategic Plan. A summary of the approved uses of funds for 2015 follows:

2015 BUDGET SUMMARY COMPARED TO 2014 APPROVED BUDGET(in thousands of dollars)

The resulting Budget of $1,082.7 million is needed to meet the mission of Colorado Springs Utilities to provide safe, reliable, competitively-priced electric, natural gas, water and wastewater services to its citizen owners and customers. Delivering on this mission will require a focus on meeting environmental and regulatory requirements, while maintaining critical infrastructure in 2015. Additionally, to maintain financial stability, Colorado Springs Utilities must generate sufficient revenue to meet the financial metrics of a “AA” credit rated utility.

2015 Approved Budget 2014 Approved Budget Increase / (Decrease) % Change Capitalized Projects & Interest $ 329,723 $ 410,049 $ (80,326) -19.6%

Fuel Operations & Maintenance 286,985 279,204 7,781 2.8%

Non-Fuel Operations & Maintenance 283,841 288,112 (4,271) -1.5%

Debt Service 143,054 143,273 (219) -0.2%

Transfers - Surplus Funds to City1 32,479 31,680 799 2.5%

Other2 6,600 1,063 5,537 520.9%

TOTAL $ 1,082,682 $ 1,153,382 $ (70,699) -6.1%

Note: Totals may vary due to rounding.

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Transfers - Surplus Funds to City are in accordance with approved Resolution No. 131-10 dated August 10, 2010 at an electric surplus rate of $0.006173 per Kwh and a gas surplus rate per Mcf delivered at 14.65 psi of $0.391539.

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2015 BUDGET SUMMARY (in thousands of dollars)

Capitalized Projects & Interest $329,723

30%

Fuel Operations & Maintenance

$286,985 27%

Non-Fuel Operations & Maintenance $283,841 26% Debt Service $143,054 13%

Transfers - Surplus Funds to City1 $32,479 3% Other2 $6,600 1%

2015 Total Appropriations

$1,082,682

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Transfers - Surplus Funds to City are in accordance with approved Resolution No. 131-10 dated August 10, 2010 at an electric surplus rate of $0.006173 per Kwh and a gas surplus rate per Mcf delivered at 14.65 psi of $0.391539.

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CAPITALIZED PROJECTS AND INTEREST (in thousands of dollars)

Capital improvements are required to maintain and rehabilitate aging infrastructure in order to provide safe and reliable services to present customers, to prepare for future demand, and to meet

environmental and regulatory requirements.

Capital expenditures are driven by $97.6 million in the Water Service for construction of the Southern Delivery System (SDS) Phase I, advancing engineering and geotechnical work for SDS Phase II, and $71.0 million in the Electric Service to install sulfur dioxide gas scrubbers at the Martin Drake and Ray Nixon power plants. 2015 Approved Budget 2014 Approved Budget Increase / (Decrease) % Change Electric $ 122,675 $ 112,971 $ 9,704 8.6% Natural Gas 14,254 17,133 (2,879) -16.8% Water 138,622 233,168 (94,546) -40.5% Wastewater 14,743 11,586 3,157 27.2% Streetlighting 1,111 927 183 19.8% Common 11,383 15,206 (3,823) -25.1%

TOTAL (before AFUDC &

Capitalized Interest) $ 302,788 $ 390,991 $ (88,204) -22.6%

AFUDC & Capitalized Interest 26,936 19,058 7,878 41.3%

TOTAL $ 329,723 $ 410,049 $ (80,326) -19.6%

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FUEL OPERATIONS AND MAINTENANCE COSTS (in thousands of dollars)

The fuel used to generate electricity for customers and the natural gas provided to customers represents a significant portion of the Budget. As commodity prices change an electric and gas cost adjustment is used to pass these costs or savings through to customers.

2015 Approved Budget 2014 Approved Budget Increase / (Decrease) % Change Purchased Power $ 18,840 $ 25,191 $ (6,351) -25.2%

Total Fuel for Territorial Generation 116,512 109,335 7,177 6.6%

Total Natural Gas 130,709 120,738 9,971 8.3%

Wholesale Electric 10,128 10,074 54 0.5% Natural Gas 15,415 15,415 0 0.0% Total Wholesale 25,543 25,489 54 0.2% Inter-Service Eliminations1 (4,619) (1,549) (3,070) 198.2% TOTAL $ 286,985 $ 279,204 $ 7,781 2.8%

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Inter-Service Eliminations are made to eliminate double counting of revenues and expenses provided from one utility service to another. Such revenues and expenses are eliminated on a consolidated enterprise basis.

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NONFUEL OPERATIONS AND MAINTENANCE COSTS BY SERVICE (in thousands of dollars)

Colorado Springs Utilities has prioritized and streamlined operating processes that enable the safe and efficient delivery of utility services while complying with all regulations. This effort has allowed us to accommodate increased costs for plant maintenance, post-fire flood mitigation, employee benefits, and other critical operating and maintenance activities with a minimal year over year increase in expenses.

2015 Approved Budget 2014 Approved Budget Increase / (Decrease) % Change Electric

Labor & Benefits $ 75,797 $ 72,826 $ 2,971 4.1%

Non-Labor 49,804 58,973 (9,169) -15.5%

Total 125,601 131,799 (6,198) -4.7%

Natural Gas

Labor & Benefits 25,127 24,482 645 2.6%

Non-Labor 13,132 14,199 (1,067) -7.5%

Total 38,259 38,681 (423) -1.1%

Water

Labor & Benefits 46,083 42,122 3,960 9.4%

Non-Labor 48,597 54,028 (5,430) -10.1%

Total 94,680 96,150 (1,470) -1.5%

Wastewater

Labor & Benefits 22,019 21,762 257 1.2%

Non-Labor 13,796 14,687 (891) -6.1%

Total 35,815 36,449 (634) -1.7%

Streetlighting

Labor & Benefits 973 1,098 (124) -11.3%

Non-Labor 2,213 2,401 (187) -7.8%

Total 3,187 3,498 (312) -8.9%

Inter-Service Eliminations1 (13,701) (18,465) 4,764 25.8%

TOTAL $ 283,841 $ 288,112 $ (4,271) -1.5%

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REGULAR, CAPITAL AND OTHER LABOR COSTS (in thousands of dollars)

LABOR COSTS BY CATEGORY (in thousands of dollars) 2015 Approved Budget 2014 Approved Budget Increase / (Decrease) % Change Operations & Maintenance $ 172,539 $ 164,900 $ 7,639 4.6%

Capital 25,452 23,771 1,681 7.1% Other 1,363 1,374 (11) -0.8% TOTAL $ 199,354 $ 190,045 $ 9,309 4.9% 2015 Approved Budget 2014 Approved Budget Increase / (Decrease) % Change Regular Base Pay $ 148,220 $ 139,760 $ 8,460 6.1%

Overtime 6,194 6,913 (719) -10.4% Standby/Shift 1,396 1,352 45 3.3% Other Compensation 591 626 (35) -5.6% Total Labor 156,401 148,651 7,750 5.2% Employee Benefits 41,646 40,069 1,577 3.9% Post-Retirement Expenses 1,306 1,325 (19) -1.4%

Total Benefits & Other 42,953 41,394 1,559 3.8%

TOTAL LABOR & BENEFITS $ 199,354 $ 190,045 $9,309 4.9%

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DEBT SERVICE (in thousands of dollars) 2015 Approved Budget 2014 Approved Budget Increase / (Decrease) % Change Electric Interest Payments¹ $ 42,760 $ 43,571 $ (810) -1.9% Principal Repayments 27,766 26,280 1,486 5.7% AFUDC & Capitalized Interest (1,443) (639) (804) 125.8% Total 69,083 69,211 (128) -0.2% Natural Gas

Interest Payments¹ 6,902 6,854 48 0.7%

Principal Repayments 4,727 4,388 339 7.7% AFUDC & Capitalized Interest (493) (87) (406) 464.3% Total 11,135 11,154 (19) -0.2% Water

Interest Payments¹ 43,939 40,231 3,708 9.2%

Principal Repayments 18,344 15,207 3,136 20.6% AFUDC & Capitalized Interest (24,999) (18,254) (6,745) 37.0% Total 37,283 37,184 99 0.3% Wastewater

Interest Payments¹ 13,705 14,162 (457) -3.2%

Principal Repayments 11,095 10,890 205 1.9%

AFUDC & Capitalized Interest - (72) 72 -100.0% Total 24,800 24,979 (179) -0.7% Streetlighting

Interest Payments¹ 427 441 (14) -3.1% Principal Repayments 326 308 17 5.7% AFUDC & Capitalized Interest - (5) 5 -100.0% Total 753 744 9 1.2% Total

Interest Payments¹ 107,734 105,259 2,475 2.4%

Principal Repayments 62,257 57,073 5,184 9.1% AFUDC & Capitalized Interest (26,936) (19,058) (7,878) 41.3%

TOTAL $ 143,054 $ 143,273 $ (219) -0.2%

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Interest payments are net of subsidies received for Build America Bonds issued for the Southern Delivery System and Front Range Power.

Bonds are typically issued for the general system and not specific to service. For forecasting purposes bonds and debt service are allocated based on capital budgets and then recorded to actuals as the expense is incurred.

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INTER-SERVICE ELIMINATIONS (in thousands of dollars)

2015 Approved Budget 2014 Approved Budget Increase / (Decrease) % Change Electric Service $ 11,082 $ 12,378 $ (1,296) -10.5%

Natural Gas Service 2,087 2,085 2 0.1%

Water Service 4,639 4,935 (296) -6.0% Wastewater Service 512 616 (104) -16.9% TOTAL $ 18,320 $ 20,014 $ (1,694) -9.2% 2015 Approved Budget 2014 Approved Budget Increase / (Decrease) % Change Fuel $ 4,619 $ 1,549 $ 3,070 198.2% Non-Fuel 13,701 18,465 (4,764) -25.8% TOTAL $ 18,320 $ 20,014 $ (1,694) -9.2%

Operations & Maintenance Expense Revenue

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REVENUE AND EXPENDITURE OVERVIEW

OPERATING REVENUES BY SERVICE (in thousands of dollars)

Electric $ 458,401 $ 435,685 $ 417,778 $ 22,716 5.2% $ 40,623 9.7% Natural Gas 221,675 212,225 208,170 9,450 4.5% 13,505 6.5% Water 195,165 199,422 143,378 (4,257) -2.1% 51,788 36.1% Wastewater 66,967 70,647 65,431 (3,680) -5.2% 1,536 2.3% Streetlighting 4,139 4,135 4,251 4 0.1% (112) -2.6% Subtotal $ 946,347 $ 922,114 $ 839,008 $ 24,233 2.6% $ 107,339 12.8% Inter-Service Eliminations (18,320) (20,014) (15,248) 1,694 8.5% (3,072) -20.1% TOTAL $ 928,027 $ 902,099 $ 823,760 $ 25,927 2.9% $ 104,267 12.7%

2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual 2015 Approved Budget 2014 Approved Budget 2013 Actual Electric $458,401 49% Natural Gas $221,675 23% Water $195,165 21% Wastewater $66,967 7% Streetlighting $4,139 0%

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OPERATING REVENUE BY SERVICE AND SOURCE (in thousands of dollars)

TOTAL Residential $ Commercial 304,301 Industrial 74,681 Military 49,860 Transmission Sales Wholesale & Other Irrigation 3,300 Streetlighting Inter-Service Revenues¹ TOTAL $ 946,347 $ ELECTRIC Residential $ Commercial 152,085 Industrial 68,962 Military 23,404 Transmission Sales 776 Wholesale & Other Inter-Service Revenues¹ TOTAL $ 458,401 $ NATURAL GAS Residential $ Commercial 57,318 Industrial 5,719 Military 18,146 Transmission Sales Wholesale & Other Inter-Service Revenues¹ TOTAL $ 221,675 $ WATER Residential $ Commercial 79,487 Military 8,310 Wholesale & Other Irrigation 3,300 Inter-Service Revenues¹ TOTAL $ 195,165 $ WASTEWATER Residential $ Commercial 15,411 Wholesale & Other Inter-Service Revenues¹ TOTAL $ 66,967 $ STREETLIGHTING $ 444,577 $ 441,396 $ 396,456 $ 3,182 0.7% $ 48,121 12.1% 288,615 254,096 15,686 5.4% 50,205 19.8% 85,735 66,975 (11,054) -12.9% 7,706 11.5% 34,596 36,243 15,264 44.1% 13,617 37.6% 2,564 3,674 4,733 (1,110) -30.2% (2,169) -45.8% 44,606 41,458 58,999 3,148 7.6% (14,393) -24.4% 2,492 2,007 808 32.4% 1,293 64.4% 4,139 4,135 4,251 4 0.1% (112) -2.6% 18,320 20,014 15,248 (1,694) -8.5% 3,072 20.1% 922,114 $ 839,008 $ 24,233 2.6% $ 107,339 12.8% 178,275 $ 171,811 $ 162,930 $ 6,464 3.8% $ 15,346 9.4% 141,260 127,256 10,825 7.7% 24,829 19.5% 68,622 63,404 341 0.5% 5,559 8.8% 24,615 20,013 (1,211) -4.9% 3,391 16.9% 1,039 2,485 (263) -25.3% (1,708) -68.8% 23,817 15,959 32,646 7,857 49.2% (8,829) -27.0% 11,082 12,378 9,046 (1,296) -10.5% 2,036 22.5% 435,685 $ 417,778 $ 22,716 5.2% $ 40,623 9.7% 120,426 $ 120,134 $ 114,266 $ 292 0.2% $ 6,160 5.4% 51,542 56,112 5,775 11.2% 1,205 2.1% 17,113 3,571 (11,395) -66.6% 2,148 60.1% 1,702 10,237 16,444 966.2% 7,910 77.3% 1,788 2,635 2,249 (847) -32.1% (461) -20.5% 16,192 17,014 20,143 (822) -4.8% (3,951) -19.6% 2,087 2,085 1,592 2 0.1% 495 31.1% 212,225 $ 208,170 $ 9,450 4.5% $ 13,505 6.5% 95,949 $ 96,389 $ 71,425 $ (440) -0.5% $ 24,524 34.3% 80,057 55,515 (571) -0.7% 23,972 43.2% 8,279 5,993 31 0.4% 2,317 38.7% 3,481 7,270 4,368 (3,789) -52.1% (887) -20.3% 2,492 2,007 808 32.4% 1,293 64.4% 4,639 4,935 4,070 (296) -6.0% 570 14.0% 199,422 $ 143,378 $ (4,257) -2.1% $ 51,788 36.1% 49,927 $ 53,062 $ 47,836 $ (3,134) -5.9% $ 2,091 4.4% 15,755 15,212 (343) -2.2% 199 1.3% 1,116 1,214 1,841 (98) -8.1% (725) -39.4% 512 616 541 (104) -16.9% (29) -5.4% 70,647 $ 65,431 $ (3,680) -5.2% $ 1,536 2.3% 4,139 $ 4,135 $ 4,251 $ 4 0.1% $ (112) -2.6%

1_{Inter-Service Eliminations are made to eliminate double counting of revenues and expenses provided from one utility}

service to another. Such revenues and expenses are eliminated on a consolidated enterprise basis.

2015 Approved Budget 2013 Actual 2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual 2014 Approved Budget

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OPERATING REVENUES BY SERVICE AND SOURCE (in thousands of dollars)

Residential $444,577 47% Commercial $304,301 32% Industrial $74,681 8% Military $49,860 5% Transmission Sales $2,564 0% Wholesale & Other

$44,606 5% Irrigation $3,300 0% Streetlighting $4,139 1% Inter-Service Revenues 18,320 2%

2015 Operating Revenues by Source

$946,347 _$922,114 $839,008 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 2015 Approved Budget 2014 Approved Budget 2013 Actual

2015-2013 Comparative Totals

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OPERATING REVENUES BY SERVICE AND SOURCE (in thousands of dollars)

ELECTRIC Sales in MWH Residential Commercial Industrial Military Transmission Sales Wholesale & Other Inter-Service Revenues¹

Total

NATURAL GAS Sales in mcf at 12.01 psia

Residential Commercial Industrial Military

Transmission Sales Wholesale & Other Inter-Service Revenues¹ Total WATER Sales in cf Residential Commercial Military

Wholesale & Other Irrigation Inter-Service Revenues¹ Total WASTEWATER Sales in cf Residential Commercial Wholesale & Other Inter-Service Revenues¹

Total STREETLIGHTING

38 136,508 163 4,639 195,165 $ 1,116 512 66,967 $ 4,139 $ 1,051,923,504 486,402,294 42,071,066 19,010,499 1,599,407,363 N/A 221,044 73 140,219 49,927 $ 15,411 129,205 7,265 202,260,132 3,533,387,155 176,839 19,930 18 7 21 81 196,896 19,492,717 250,979,566 14,988,048 57,318 1,381,858,800 214,762,690 95,949 $ 126,506 5,719 18,146 1,788 16,192 2,087 221,675 $ 8,446,971 723,709 2,277,830 1,899,349 378,862 28,714,770 1,464,033,250 776 23,817 187,545 31,921 283 407 120,426 $ 11,082 458,401 $ 1,440,353 1,537,169 1,007,419 365,707 22,242 3,173 134,822 4,510,884 178,275 $ 152,085 68,962 23,404 1

79,487 8,310 3,481 3,300 13,467 10 163 18 4 866 Total Number of Customers Sales 2015 Approved Budget

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OPERATING EXPENSES BY SERVICE (in thousands of dollars)

Electric $ 345,295 $ 347,612 $ 335,042 $ (2,317) -0.7% $ 10,254 3.1% Natural Gas 191,982 182,594 176,002 9,388 5.1% 15,980 9.1% Water 144,227 132,219 118,338 12,008 9.1% 25,889 21.9% Wastewater 51,890 52,826 48,623 (936) -1.8% 3,267 6.7% Streetlighting 4,571 4,849 4,511 (279) -5.8% 59 1.3% Subtotal $ 737,965 $ 720,101 $ 682,516 $ 17,864 2.5% $ 55,449 8.1% Inter-Service Eliminations (18,320) (20,014) (15,248) 1,694 -8.5% (3,072) -20.1% TOTAL $ 719,645 $ 700,087 $ 667,268 $ 19,559 2.8% $ 52,377 7.8%

2015 Approved Budget 2014 Approved Budget 2013 Actual 2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual Electric $345,295 47% Natural Gas $191,982 26% Water $144,227 19% Wastewater $51,890 7% Streetlighting $4,571 1%

2015 Operating Expenses by Service

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OPERATING EXPENSES BY USE AND SERVICE (in thousands of dollars)

FUEL Electric $ 145,479 $ 144,599 $ 149,880 $ 880 0.6% $ (4,400) -2.9% Natural Gas 146,125 136,154 134,123 9,971 7.3% 12,002 8.9% Inter-Service Eliminations (4,619) (1,549) (4,535) (3,070) 198.2% (85) 1.9% Subtotal $ 286,985 $ 279,204 $ 279,468 $ 7,781 2.8% $ 7,517 2.7% NON-FUEL Electric $ 125,601 $ 131,799 $ 120,363 $ (6,198) -4.7% $ 5,238 4.4% Natural Gas 38,259 38,681 34,845 (423) -1.1% 3,414 9.8% Water 94,680 96,150 88,359 (1,470) -1.5% 6,321 7.2% Wastewater 35,815 36,449 33,024 (634) -1.7% 2,791 8.5% Streetlighting 3,187 3,498 3,204 (312) -8.9% (17) -0.5% Inter-Service Eliminations (13,701) (18,465) (10,714) 4,764 -25.8% (2,987) 27.9% Subtotal $ 283,841 $ 288,112 $ 269,081 $ (4,271) -1.5% $ 14,760 5.5% DEPRECIATION Electric $ 73,906 $ 70,935 $ 64,510 $ 2,970 4.2% $ 9,396 14.6% Natural Gas 7,599 7,759 7,035 (160) -2.1% 564 8.0% Water 49,547 36,069 29,979 13,478 37.4% 19,568 65.3% Wastewater 16,075 16,377 15,599 (302) -1.8% 476 3.1% Streetlighting 1,384 1,351 1,307 33 2.4% 77 5.9% Subtotal $ 148,511 $ 132,492 $ 118,430 $ 16,019 12.1% $ 30,081 25.4% OTHER Electric 309 279 289 30 10.8% 20 6.8% Subtotal $ 309 $ 279 $ 289 $ 30 10.8% $ 20 6.8% TOTAL $ 719,645 $ 700,087 $ 667,268 $ 19,559 2.8% $ 52,377 7.8%

2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual 2015 Approved Budget 2014 Approved Budget 2013 Actual Electric $125,601 42% Natural Gas $38,259 13% Water $94,680 32% Wastewater $35,815 12% Streetlighting $3,187 1%

2015 Non-Fuel Operating &

Maintenance Expenses

Excludes Inter-Sevice Eliminations

Electric $145,479 50% Natural Gas $146,125 50%

2015 Fuel Operating &

Maintenance Expenses

(23)

2015 ENTERPRISE FINANCIAL PLAN

CONDENSED FINANCIAL STATEMENTS (in thousands of dollars)

STATEMENT OF NET ASSETS 2014 Budget 2013 Actual

Assets

Current $ 400,359 $ 390,796 $ 427,939 $ 9,563 $ (27,580) Noncurrent

-Other 294,099 566,031 377,855 (271,932) (83,756) Capital Assets, Net 3,868,293 3,678,106 3,388,200 190,187 480,092 Total Assets $ 4,562,751 $ 4,634,933 $ 4,193,995 $ (72,182) $ 368,756 Liabilities Current $ 182,767 $ 164,267 $ 182,657 $ 18,500 $ 110 Noncurrent 2,612,736 2,739,017 2,525,341 (126,281) 87,395 Total Liabilities $ 2,795,503 $ 2,903,283 $ 2,707,997 $ (107,780) $ 87,506 Net Assets $ 1,767,248 $ 1,731,650 $ 1,485,998 $ 35,598 $ 281,250 Total Liabilities & Net Assets $ 4,562,751 $ 4,634,933 $ 4,193,995 $ (72,182) $ 368,756

Operating Revenues $ 928,027 $ 902,099 $ 823,760 $ 25,927 $ 104,267 Operating Expenses (719,645) (700,087) (667,268) 19,559 52,377 Operating Income $ 208,382 $ 202,013 $ 156,492 $ 6,369 $ 51,890 Non-Operating Revenues/(Expenses) - Net (70,106) (71,337) (135,679) (1,231) (65,573)

Income/(Loss) Before Contributions & Transfers $ 138,276 $ 130,676 $ 20,813 $ 7,600 $ 117,463

35,881

$ $ 37,171 $ 44,490 $ (1,290) $ (8,609) Transfers - Surplus Funds to City (32,479) (31,680) (31,844) 799 635 Transfers - Other - (716) (816) (716) (816)

Change in Net Assets $ 141,678 $ 135,451 $ 32,642 $ 6,227 $ 109,035 Net Assets - Beginning of year $ 1,625,570 $ 1,596,199 $ 1,454,174 $ 29,371 $ 171,396 Net Assets - End of Year $ 1,767,248 1,731,650 $ 1,485,998 35,598 281,250 STATEMENT OF CASH FLOWS

Net Cash Provided By/(Used In):

Operating Activities $ 350,602 $ 333,738 $ 252,262 $ 16,864 $ 98,340 Non-Capital Financing Activities (32,479) (31,680) (31,584) 799 895 Capital & Related Financing Activities (337,792) (357,009) (211,162) (19,216) 126,630 Investing Activities 692 3,012 (46,281) (2,321) 46,973 Net Increase/(Decrease) $ (18,978) $ (51,938) $ (36,765) $ 32,961 $ 17,787 Cash and Cash Equivalents and Investments

Cash & Investments, Beginning of Year $ 340,707 $ 425,848 $ 428,629 $ (85,142) $ (87,923) Cash & Investments, End of Year 321,729 373,892 440,413 (52,163) (118,684) Note: Totals may vary due to rounding.

Contributions in Aid of Construction STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

2015 Approved Budget 2014 Approved Budget 2013 Actual 2015 Approved Budget Increase/(Decrease) from:

(24)

STATEMENT OF REVENUES, EXPENSES AND CHANGE IN NET ASSETS (in thousands of dollars)

OPERATING REVENUES $ 928,027 $ 902,099 $ 823,760 $ 25,927 2.9% $ 104,267 12.7% OPERATING EXPENSES

Production & Treatment $ 160,075 $ 155,029 $ 154,221 $ 5,046 3.3% $ 5,854 3.8% Purchased Power, Gas & Water 173,497 172,717 167,417 780 0.5% 6,081 3.6% Transmission & Distribution 40,915 37,658 39,343 3,257 8.6% 1,572 4.0% Maintenance 56,068 61,187 63,023 (5,119) -8.4% (6,955) -11.0% Administration & General 107,326 106,999 93,143 327 0.3% 14,182 15.2% Customer Accounting & Collection 20,128 21,161 20,362 (1,033) -4.9% (234) -1.2% Customer Service & Information 12,802 12,548 11,027 254 2.0% 1,775 16.1% Products & Services 15 18 12 (3) -16.0% 3 23.9% Franchise Fees 309 279 290 30 10.8% 19 6.4% Depreciation & Amortization 148,511 132,492 118,430 16,019 12.1% 30,081 25.4% Total Operating Expenses $ 719,645 $ 700,087 $ 667,269 $ 19,559 2.8% $ 52,376 7.8% OPERATING INCOME $ 208,382 $ 202,013 $ 156,491 $ 6,369 3.2% $ 51,891 33.2% Investment Income $ 692 $ 3,012 $ 2,323 $ (2,321) -77.0% $ (1,631) -70.2% Other Revenue 9,320 11,040 16,680 (1,720) -15.6% (7,360) -44.1% Other Expense (1,074) (642) (73,212) (432) 67.4% 72,138 -98.5% (79,043) (84,747) (81,469) 5,704 -6.7% 2,426 -3.0% (70,106) $ $ (71,337) $ (135,679) $ 1,231 -1.7% $ 65,573 -48.3% 138,276 $ $ 130,676 $ 20,812 $ 7,600 5.8% $ 117,464 564.4% 35,881 $ $ 37,171 $ 44,490 $ (1,290) -3.5% $ (8,609) -19.4% Transfers - Surplus Funds to City (32,479) (31,680) (31,844) (799) 2.5% (635) 2.0% Transfers - Other - (716) (816) 716 816

INCREASE/(DECREASE) IN NET ASSETS $ 141,678 $ 135,451 $ 32,642 $ 6,227 4.6% $ 109,036 334.0% Note: Totals may vary due to rounding.

Contributions in Aid of Construction

2015 Approved Budget 2014 Approved Budget 2013 Actual INCOME/(LOSS) BEFORE

CONTRIBUTIONS AND TRANSFERS NON-OPERATING

REVENUES/(EXPENSES)

Interest Expense, net of AFUDC & Bond Amortization Total Non-Operating Revenues/(Expenses) 2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual

(25)

NON-OPERATING REVENUES/(EXPENSES) AND CONTRIBUTIONS IN AID (in thousands of dollars)

Investment Income

Equity in Earnings - Young Gas $ 189 $ 100 $ 116 $ 89 89.1% $ 73 63.1% Interest Earnings 503 2,912 2,207 (2,410) -82.7% (1,704) -77.2% Subtotal $ 692 $ 3,012 $ 2,323 $ (2,321) -77.0% $ (1,631) -70.2% Other Non-Operating Revenues

Other Miscellaneous Revenue $ 9,320 $ 11,040 $ 16,680 $ (1,720) -15.6% $ (7,360) -44.1% Non-Operating Expenses

Interest on Long-Term Debt $ (87,551) $ (87,799) $ (102,284) $ 247 -0.3% $ 14,732 -14.4% AFUDC & Capitalized Interest 6,259 984 17,402 5,274 535.8% (11,143) -64.0% Bond Amortization Expense 2,250 2,068 3,413 182 8.8% (1,164) -34.1% Other Miscellaneous Expense (1,074) (642) (73,212) (432) 67.4% 72,138 -98.5% Subtotal $ (80,117) $ (85,389) $ (154,681) $ 5,271 -6.2% $ 74,564 -48.2% (70,106) $ $ (71,337) $ (135,679) $ 1,231 -1.7% $ 65,573 -48.3% Cash $ 7,250 $ 12,286 $ 12,356 $ (5,036) -41.0% $ (5,106) -41.3% Developer Fees 19,213 17,343 18,411 1,870 10.8% 802 4.4% Assets 9,418 7,542 13,723 1,876 24.9% (4,305) -31.4% 35,881 $ $ 37,171 $ 44,490 $ (1,290) -3.5% $ (8,609) -19.4%

Note: Totals may vary due to rounding. CONTRIBUTIONS IN AID OF CONSTRUCTION Total Non-Operating Revenues/(Expenses) NON-OPERATING REVENUES/(EXPENSES)

Total Contributions in Aid of Construction 2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual 2015 Approved Budget 2014 Approved Budget 2013 Actual

(26)

CASH BALANCE (in thousands of dollars)

Unrestricted Cash Balance $ 196,189 $ 171,441 $ 225,819 $ 24,748 14.4% $ (29,629) -13.1% Restricted Cash Balance 125,540 202,451 214,594 (76,911) -38.0% (89,054) -41.5% TOTAL $ 321,729 $ 373,892 $ 440,413 $ (52,163) -14.0% $ (118,684) -26.9%

Restricted Cash Balance represents cash on which constraints have been placed, principally by creditors, through bond covenants/provisions. Unrestricted Cash Balance includes all other cash.

2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual 2015 Approved Budget 2014 Approved Budget 2013 Actual $196,189 $171,441 $225,819 $125,540 $202,451 $214,594 $0 $100,000 $200,000 $300,000 $400,000 $500,000 2015 Approved Budget 2014 Approved Budget 2013 Actual

Cash Balance

(27)

DEBT (in thousands of dollars)

Current Maturities of Revenue Bonds $ 70,742 $ 60,678 $ 55,764 $ 10,064 16.6% $ 14,978 26.9% Current Notes & Loans Payable 1,498 1,526 1,531 (28) -1.9% (33) -2.1% Subtotal $ 72,240 $ 62,204 $ 57,295 $ 10,036 16.1% $ 14,945 26.1% Revenue Bonds, Net $ 2,408,158 $ 2,410,763 $ 2,345,644 $ (2,606) -0.1% $ 62,514 2.7% Notes & Loans Payable 15,321 16,818 16,636 (1,498) -8.9% (1,315) -7.9% Subtotal $ 2,423,478 $ 2,427,582 $ 2,362,280 $ (4,103) -0.2% $ 61,198 2.6% Net Gain/(Loss) on Refundings $ (27,701) $ - $ (28,423) $ - $ 722 -2.5% TOTAL $ 2,468,017 $ 2,489,786 $ 2,391,152 $ (21,769) -0.9% $ 76,865 3.2%

2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual 2015 Approved Budget 2014 Approved Budget 2013 Actual $2,468,017 _$2,489,786 $2,391,152 $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2015 Approved Budget 2014 Approved Budget 2013 Actual

Debt

(28)

BOND ISSUES (in thousands of dollars)

Electric $ 28,256 $ 54,685 $ 32,606 $ (26,429) -48.3% $ (4,351) -13.3% Natural Gas 8,208 8,824 6,803 (616) -7.0% 1,405 20.7% Water 68,315 101,669 88,075 (33,353) -32.8% (19,760) -22.4% Wastewater - - 76 - - (76) - TOTAL $ 104,779 $ 165,178 $ 127,560 $ (60,399) -36.6% $ (22,781) -17.9%

Bonds are typically issued for the general system (with the exception of SDS) and not specific to service. For forecasting purposes bonds and debt service are allocated based on capital budgets and then recorded to actuals as the expense is incurred. 2015 Approved Budget 2014 Approved Budget 2013 Actual 2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual $28,256 $54,685 $32,606 $8,208 _$8,824 _$6,803 $68,315 $101,669 $88,075 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 2015 Approved Budget 2014 Approved Budget 2013 Actual

Bond Issues

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DEBT SERVICE (in thousands of dollars)

ELECTRIC

Interest Payments¹ $ 42,760 $ 43,571 $ 42,935 $ (810) -1.9% $ (175) -0.4% Principal Repayments 27,766 26,280 25,397 1,486 5.7% 2,369 9.3% AFUDC & Capitalized Interest (1,443) (639) (4,164) (804) 125.8% 2,721 -65.3% TOTAL $ 69,083 $ 69,211 $ 64,168 $ (128) -0.2% $ 4,915 7.7% NATURAL GAS

Interest Payments¹ $ 6,902 $ 6,854 $ 6,612 $ 48 0.7% $ 290 4.4% Principal Repayments 4,727 4,388 3,707 339 7.7% 1,019 27.5% AFUDC & Capitalized Interest (493) (87) (206) (406) 464.3% (288) 139.9% TOTAL $ 11,135 $ 11,154 $ 10,114 $ (19) -0.2% $ 1,021 10.1% WATER

Interest Payments¹ $ 43,939 $ 40,231 $ 37,098 $ 3,708 9.2% $ 6,841 18.4% Principal Repayments 18,344 15,207 13,501 3,136 20.6% 4,843 35.9% AFUDC & Capitalized Interest (24,999) (18,254) (12,713) (6,745) 37.0% (12,287) 96.6% TOTAL $ 37,283 $ 37,184 $ 37,886 $ 99 0.3% $ (603) -1.6% WASTEWATER

Interest Payments¹ $ 13,705 $ 14,162 $ 14,792 $ (457) -3.2% $ (1,087) -7.4% Principal Repayments 11,095 10,890 9,436 205 1.9% 1,659 17.6% AFUDC & Capitalized Interest - (72) (285) 72 -100.0% 285 -100.0% TOTAL $ 24,800 $ 24,979 $ 23,944 $ (179) -0.7% $ 856 3.6% STREETLIGHTING

Interest Payments¹ $ 427 $ 441 $ 470 $ (14) -3.1% $ (43) -9.1% Principal Repayments 326 308 244 17 5.7% 82 33.4% AFUDC & Capitalized Interest - (5) (35) 5 -100.0% 35 -100.0% TOTAL $ 753 $ 744 $ 680 $ 9 1.2% $ 74 10.8% TOTAL

Interest Payments¹ $ 107,734 $ 105,259 $ 101,908 $ 2,475 2.4% $ 5,826 5.7% Principal Repayments 62,257 57,073 52,285 5,184 9.1% 9,971 19.1% AFUDC & Capitalized Interest (26,936) (19,058) (17,402) (7,878) 41.3% (9,534) 54.8% TOTAL $ 143,054 $ 143,273 $ 136,791 $ (219) -0.2% $ 6,263 4.6%

2014 Budget 2013 Actual 2015 Approved Budget 2014 Approved Budget 2013 Actual 2015 Approved Budget Increase/(Decrease) from: 1

Interest payments are net of subsidies received for Build America Bonds issued for Southern Delivery System and Front Range Power.

Bonds are typically issued for the general system (with the exception of SDS) and not specific to service. For forecasting purposes bonds and debt service are allocated based on capital budgets and then recorded to actuals as the expense is incurred.

$143,054 $143,273 $136,791 $100,000 $110,000 $120,000 $130,000 $140,000 $150,000 2015 Approved Budget 2014 Approved Budget 2013 Actual

Debt Service

(30)

SOURCES AND USES OF FUNDS (in thousands of dollars)

SOURCES OF FUNDS Operating Revenues: Electric $ 458,401 $ 435,685 $ 417,778 $ 22,716 5.2% $ 40,623 9.7% Natural Gas 221,675 212,225 208,170 9,450 4.5% 13,505 6.5% Water 195,165 199,422 143,378 (4,257) -2.1% 51,788 36.1% Wastewater 66,967 70,647 65,431 (3,680) -5.2% 1,536 2.3% Streetlighting 4,139 4,135 4,251 4 0.1% (112) -2.6% Inter-Service Eliminations1 (18,320) (20,014) (15,248) 1,694 -8.5% (3,072) 20.1% Subtotal $ 928,027 $ 902,099 $ 823,760 $ 25,927 2.9% $ 104,267 12.7% Investment Income 692 3,012 2,323 (2,321) -77.0% (1,631) -70.2% Build America Bonds Subsidy 7,935 8,115 7,871 (180) -2.2% 64 0.8%

26,463

29,629 30,767 (3,166) -10.7% (4,304) -14.0%

Bond Proceeds 100,588 158,571 127,560 (57,983) -36.6% (26,972) -21.1%

- 19,107 - (19,107) -100.0% Change In Cash On Hand 18,978 52,699 14,028 (33,721) -64.0% 4,950 35.3% TOTAL SOURCES 2 $ 1,082,682 $ 1,154,125 $ 1,025,414 $ (71,443) -6.2% $ 57,268 5.6% USES OF FUNDS

Operating Expenses - Fuel 286,985 279,204 279,468 7,781 2.8% 7,517 2.7% Operating Expenses - Non-Fuel 283,841 288,112 269,081 (4,271) -1.5% 14,760 5.5%

32,788

31,959 32,135 829 2.6% 653 2.0%

Debt Service Payments2:

Interest Payments $ 80,798 $ 86,201 $ 84,506 $ (5,403) -6.3% $ (3,708) -4.4% Principal Repayments 62,257 57,073 52,285 5,184 9.1% 9,971 19.1% Total Debt Service $ 143,054 $ 143,273 $ 136,791 $ (219) -0.2% $ 6,263 4.6% Capital Expenditures: Cash Funded $ 217,695 $ 251,431 $ 169,359 $ (33,735) -13.4% $ 48,336 28.5% Bond Funded 112,028 158,619 138,580 (46,591) -29.4% (26,552) -19.2% Total Capital $ 329,723 $ 410,049 $ 307,940 $ (80,326) -19.6% $ 21,784 7.1% 6,291 784 - 5,507 702.2% 6,291 Change In Cash On Hand - - - -

-TOTAL USES 3 $ 1,082,682 $ 1,153,382 $ 1,025,414 $ (70,699) -6.1% $ 57,268 5.6% Note: Totals may vary due to rounding.

Major non-cash (expense) and revenue items not reflected above that are included on the income statement:

Depreciation & Amortization $ (148,511) $ (132,492) $ (118,430) $ 16,019 12.1% $ (30,081) 25.4%

2

Includes AFUDC and Capitalized Interest.

3_{Total Sources approved at $1,154,125; Total Uses approved at $1,153,382.}

1_{Inter-Service Eliminations are made to eli minate double counting of revenues and expenses provided from one utility service to another. Such revenues}

and expenses are elimi nated on a consolidated enterprise basis.

2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual 2015 Approved Budget 2013 Actual 2014 Approved Budget

Transfers - Surplus Funds to City & Franchise Fees

Contributions in Aid of Construction (Cash and Developer Fees)

Net Changes In Assets & Liabilities - Sources

Net Changes In Assets & Liabilities - Uses

(31)

FINANCIAL MEASURES – DEBT RATIO (in thousands of dollars)

CALCULATION:

Current Maturities of Revenue Bonds $ 70,742 $ 60,678 $ 55,764 $ 10,064 16.6% $ 14,978 26.9% Current Notes & Loans Payable 1,498 1,526 1,531 (28) -1.9% (33) -2.1% Revenue Bonds, Net 2,408,158 2,410,763 2,345,644 (2,606) -0.1% 62,514 2.7% Notes & Loans Payable 15,321 16,818 16,636 (1,498) -8.9% (1,315) -7.9% Net Gain/(Loss) on Refundings (27,701) - (28,423) (27,701) - 722 -2.5% Net Funded Debt $ 2,468,017 $ 2,489,786 $ 2,391,152 $ (21,769) -0.9% $ 76,865 3.2% Current Maturities of Revenue Bonds $ 70,742 $ 60,678 $ 55,764 $ 10,064 16.6% $ 14,978 26.9% Current Notes & Loans Payable 1,498 1,526 1,531 (28) -1.9% (33) -2.1% Revenue Bonds, Net 2,408,158 2,410,763 2,345,644 (2,606) -0.1% 62,514 2.7% Notes & Loans Payable 15,321 16,818 16,636 (1,498) -8.9% (1,315) -7.9% Net Gain/(Loss) on Refundings (27,701) - (28,423) (27,701) - 722 -2.5% Net Assets 1,767,248 1,731,650 1,485,998 35,598 2.1% 281,250 18.9% Total Capitalization $ 4,235,265 $ 4,221,435 $ 3,877,150 $ 13,830 0.3% $ 358,115 9.2% Debt Ratio 58.3% 59.0% 61.7% -0.7% -1.2% -3.4% -5.5% Notes: Totals may vary due to rounding.

2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual 2015 Approved Budget 2014 Approved Budget 2013 Actual

Debt Ratio calculation: Net Funded Debt/Total Capitalization

58.3% 59.0% 61.7% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 2015 Approved Budget 2014 Approved Budget 2013 Actual

Debt Ratio

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FINANCIAL MEASURES – ADJUSTED DEBT SERVICE COVERAGE (in thousands of dollars)

CALCULATION:

Net Revenues:

Operating Revenues $ 928,027 $ 902,099 $ 823,760 $ 25,927 2.9% $ 104,267 12.7% 26,463

29,629 30,767 (3,166) -10.7% (4,304) -14.0% Interest Earnings w/o Bond Interest 503 2,912 561 (2,410) -82.7% (58) -10.4% Build America Bonds Subsidy 7,935 8,115 7,871 (180) -2.2% 64 0.8% Total Revenue $ 962,927 $ 942,755 $ 862,958 $ 20,172 2.1% $ 99,969 11.6% Total Operating Expenses (719,645) (700,087) (667,269) (19,559) 2.8% (52,376) 7.8% Depreciation & Amortization 148,511 132,492 118,430 16,019 12.1% 30,081 25.4%

Transfers - Surplus Funds to City (32,479) (31,680) (31,844) (799) 2.5% (635) 2.0% Net Revenues $ 359,313 $ 343,480 $ 282,275 $ 15,833 4.6% $ 77,039 27.3% Bond Year Debt Service $ 169,990 $ 162,331 $ 154,193 $ 7,659 4.7% $ 15,797 10.2% Adjusted Debt Service Coverage Ratio 2.11 2.12 1.83 (0.00) -0.1% 0.28 15.5% Note: Totals may vary due to rounding.

2015 Approved Budget Increase/(Decrease) from:

2014 Budget 2013 Actual

Contributions in Aid of Construction (Cash and Developer Fees)

2014 Approved Budget 2013 Actual 2015 Approved Budget

Adjusted Debt Service Coverage Ratio calculation: Net Revenues/Bond Year Debt Service

2.11 2.12 1.83 1.00 1.20 1.40 1.60 1.80 2.00 2.20 2015 Approved Budget 2014 Approved Budget 2013 Actual

Adjusted Debt Service Coverage

(33)

FINANCIAL MEASURES – DAYS OF CASH ON HAND (in thousands of dollars)

CALCULATION:

Cash and Cash Equivalents-Unrestricted $ 196,189 $ 171,441 $ 225,819 $ 24,748 14.4% $ (29,629) -13.1% Cash Expense per Day

Total Operating Expenses $ 719,645 $ 700,087 $ 667,269 $ 19,559 2.8% $ 52,376 7.8% Less: Depreciation & Amortization 148,511 132,492 118,430 16,019 12.1% 30,081 25.4% Net Cash Expense $ 571,134 $ 567,595 $ 548,839 $ 3,540 0.6% $ 22,296 4.1% Number of Days in Period 365 365 365 - 0.0% - 0.0% Net Cash Expense Per Day $ 1,565 $ 1,555 $ 1,504 $ 10 0.6% $ 61 4.1% Days of Cash on Hand 125.4 110.2 150.2 15.1 13.7% (24.8) -16.5% Note: Totals may vary due to rounding.

2015 Approved Budget 2014 Approved Budget 2013 Actual 2015 Approved Budget Increase/(Decrease) from: 2014 Budget 2013 Actual

Days of Cash on Hand calculation: Cash and Cash Equivalents-Unrestricted/Net Cash Expense Per Day

125.4 110.2 150.2 -20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 2015 Approved Budget 2014 Approved Budget 2013 Actual

Days of Cash on Hand

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2015-2019 ENTERPRISE FINANCIAL PLAN

CONDENSED FINANCIAL STATEMENTS (in thousands of dollars)

STATEMENT OF NET ASSETS Assets

Current $ 400,359 $ 431,707 $ 463,314 $ 521,658 $ 570,835 Noncurrent -

Other 294,099 300,953 292,209 281,803 269,039 Capital Assets, Net 3,868,293 3,992,351 4,097,204 4,146,132 4,178,236 Total Assets $ 4,562,751 $ 4,725,012 $ 4,852,727 $ 4,949,593 $ 5,018,111 Liabilities Current $ 182,767 $ 181,444 $ 188,979 $ 195,186 $ 203,352 Noncurrent 2,612,736 2,618,635 2,606,244 2,568,827 2,500,708 Total Liabilities $ 2,795,503 $ 2,800,079 $ 2,795,223 $ 2,764,013 $ 2,704,060 Net Assets 1,767,248 1,924,932 2,057,504 2,185,579 2,314,051 Total Liabilities & Net Assets $ 4,562,751 $ 4,725,012 $ 4,852,727 $ 4,949,593 $ 5,018,111

Operating Revenues $ 928,027 $ 973,852 $ 999,205 $ 1,024,501 $ 1,082,935 Operating Expenses (719,645) (752,534) (785,837) (813,462) (869,153)

Operating Income $ 208,382 $ 221,318 $ 213,368 $ 211,039 $ 213,781 Non-Operating Revenues/(Expenses) - Net (70,106) (72,629) (96,729) (97,333) (100,110)

Income/(Loss) Before Contributions & Transfers $ 138,276 $ 148,689 $ 116,639 $ 113,705 $ 113,671 Contributions in Aid of Construction $ 35,881 $ 41,823 $ 49,004 $ 47,842 $ 48,626 Transfers - Surplus Funds to City (32,479) (32,827) (33,072) (33,472) (33,825) Transfers - Other - - - -

-Change in Net Assets $ 141,678 $ 157,685 $ 132,571 $ 128,076 $ 128,471 Net Assets - Beginning of year 1,625,570 1,767,248 1,924,932 2,057,504 2,185,579 Net Assets - End of Year 1,767,248 1,924,932 2,057,504 2,185,579 2,314,051 STATEMENT OF CASH FLOWS

Net Cash Provided By (Used In):

Operating Activities $ 350,602 $ 358,498 $ 362,002 $ 368,581 $ 371,405 Non-Capital Financing Activities (32,479) (32,827) (33,072) (33,472) (33,825) Capital and Related Financing Activities (337,792) (299,279) (317,119) (293,469) (312,538) Investing Activities 692 745 766 735 773

Net Increase/(Decrease) $ (18,978) $ 27,137 $ 12,576 $ 42,375 $ 25,815 Cash and Cash Equivalents and Investments

Cash & Investments, Beginning of Year 340,707 321,729 348,866 361,442 403,818 Cash & Investments, End of Year 321,729 348,866 361,442 403,818 429,632 Note: Totals may vary due to rounding.

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

2019 Forecast 2015 Approved Budget 2016 Forecast 2017 Forecast 2018 Forecast

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STATEMENT OF REVENUES, EXPENSES AND CHANGE IN NET ASSETS (in thousands of dollars)

OPERATING REVENUES $ 928,027 $ 973,852 $ 999,205 $ 1,024,501 $ 1,082,935 OPERATING EXPENSES

Production & Treatment $ 160,075 $ 168,385 $ 179,062 $ 186,507 $ 193,148 Purchased Power, Gas & Water 173,497 173,372 178,370 184,430 217,034 Transmission & Distribution 40,915 43,426 44,080 44,216 44,663 Maintenance 56,068 62,184 66,395 66,023 67,146 Administration & General 107,326 116,350 123,387 130,606 139,991 Customer Accounting & Collection 20,128 20,763 21,450 22,092 22,843 Customer Service & Information 12,802 14,599 16,694 17,603 18,642 Products & Services 15 16 17 19 19 Franchise Taxes 309 326 344 362 382 Depreciation & Amortization 148,511 153,113 156,037 161,604 165,284 Total Operating Expenses $ 719,645 $ 752,534 $ 785,837 $ 813,462 $ 869,153 OPERATING INCOME $ 208,382 $ 221,318 $ 213,368 $ 211,039 $ 213,781 NON-OPERATING REVENUES/(EXPENSES) Investment Income $ 692 $ 745 $ 766 $ 735 $ 773 Other Revenue 9,320 9,370 9,407 9,532 9,474 Other Expense (1,074) (1,074) (1,174) (1,174) (1,174) (79,043) (81,669) (105,727) (106,426) (109,183) Total Non-Operating Revenues/(Expenses) $ (70,106) $ (72,629) $ (96,729) $ (97,333) $ (100,110)

138,276

$ $ 148,689 $ 116,639 $ 113,705 $ 113,671 Contributions in Aid of Construction $ 35,881 $ 41,823 $ 49,004 $ 47,842 $ 48,626 Transfers - Surplus Funds to City (32,479) (32,827) (33,072) (33,472) (33,825) Transfers - Other - - - - -INCREASE/(DECREASE) IN NET ASSETS $ 141,678 $ 157,685 $ 132,571 $ 128,076 $ 128,471

INCOME/(LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS

Interest Expense, net of AFUDC & Bond Amortization 2015 Approved Budget 2016 Forecast 2017 Forecast 2018 Forecast 2019 Forecast

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OPERATING REVENUES BY SERVICE (in thousands of dollars)

Electric $ 458,401 $ 491,473 $ 504,012 $ 513,971 $ 522,785 Natural Gas 221,675 222,254 227,847 233,662 268,517 Water 195,165 206,464 209,955 217,220 228,471 Wastewater 66,967 70,892 74,597 76,826 80,316 Streetlighting 4,139 4,341 4,558 4,786 5,025 Inter-Service Eliminations (18,320) (21,573) (21,764) (21,963) (22,178) TOTAL $ 928,027 $ 973,852 $ 999,205 $ 1,024,501 $ 1,082,935

2015 Approved Budget 2016 Forecast 2017 Forecast 2018 Forecast 2019 Forecast $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 2015 Approved Budget

2016 Forecast 2017 Forecast 2018 Forecast 2019 Forecast

Operating Revenues by Service

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OPERATING EXPENSES BY SERVICE (in thousands of dollars)

Electric $ 345,295 $ 366,347 $ 391,417 $ 403,223 $ 415,556 Natural Gas 191,982 193,439 200,225 206,861 238,958 Water 144,227 155,155 154,975 162,367 171,859 Wastewater 51,890 54,375 56,036 57,863 59,669 Streetlighting 4,571 4,790 4,949 5,111 5,290 Inter-Service Eliminations (18,320) (21,573) (21,764) (21,963) (22,178) TOTAL $ 719,645 $ 752,534 $ 785,837 $ 813,462 $ 869,153

2015 Approved Budget 2016 Forecast 2017 Forecast 2018 Forecast 2019 Forecast $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 2015 Approved Budget

Operating Expenses by Service

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CAPITAL EXPENDITURES (in thousands of dollars)

Electric $ 122,675 $ 119,139 $ 140,870 $ 59,092 $ 57,992 Natural Gas 14,254 17,265 16,248 17,229 17,335 Water 138,622 69,497 51,454 76,675 69,861 Wastewater 14,743 14,824 15,892 14,732 13,074 Streetlighting 1,111 1,208 1,350 1,477 1,616 Common 11,383 14,695 15,250 20,913 19,041 Sub-Total 302,788 236,628 241,063 190,118 178,918 AFUDC & Capitalized Interest 26,936 27,492 5,735 5,972 3,686 TOTAL $ 329,723 $ 264,121 $ 246,798 $ 196,090 $ 182,605

2015 Approved Budget 2016 Forecast 2017 Forecast 2018 Forecast 2019 Forecast $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 2015 Approved Budget

Capital Expenditures

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DEBT SERVICE (in thousands of dollars)

ELECTRIC

Interest Payments¹ $ 42,760 $ 43,677 $ 45,835 $ 45,930 $ 45,142 Principal Repayments 27,766 31,236 33,580 35,677 37,321 AFUDC & Capitalized Interest (1,443) (2,497) (4,164) (1,587) -TOTAL $ 69,083 $ 72,416 $ 75,251 $ 80,020 $ 82,463 NATURAL GAS

Interest Payments¹ $ 6,902 $ 7,234 $ 7,587 $ 7,925 $ 8,336 Principal Repayments 4,727 4,766 5,179 5,624 6,061 AFUDC & Capitalized Interest (493) (478) (454) (433) (410)

TOTAL $ 11,135 $ 11,522 $ 12,312 $ 13,116 $ 13,987 WATER

Interest Payments¹ $ 43,939 $ 46,843 $ 46,892 $ 47,905 $ 49,242 Principal Repayments 18,344 25,402 26,794 28,720 30,634 AFUDC & Capitalized Interest (24,999) (24,518) (1,116) (3,892) (3,276)

TOTAL $ 37,283 $ 47,727 $ 72,570 $ 72,734 $ 76,600 WASTEWATER

Interest Payments¹ $ 13,705 $ 13,336 $ 13,085 $ 12,779 $ 12,517 Principal Repayments 11,095 10,376 10,888 11,606 12,366 AFUDC & Capitalized Interest - - - (61) -TOTAL $ 24,800 $ 23,712 $ 23,973 $ 24,324 $ 24,883 STREETLIGHTING

Interest Payments¹ $ 427 $ 415 $ 397 $ 375 $ 351 Principal Repayments 326 460 485 516 548 AFUDC & Capitalized Interest - - - - -TOTAL $ 753 $ 875 $ 882 $ 891 $ 899 TOTAL

Interest Payments¹ $ 107,734 $ 111,506 $ 113,796 $ 114,914 $ 115,589 Principal Repayments 62,257 72,240 76,926 82,143 86,931 AFUDC & Capitalized Interest (26,936) (27,492) (5,735) (5,972) (3,686)

TOTAL $ 143,054 $ 156,253 $ 184,988 $ 191,085 $ 198,833

1

Interest payments are net of subsidies received for Build America Bonds issued for Southern Delivery System and Front Range Power.

Bonds are typically issued for the general system (with the exception of SDS) and not specific to service. For forecasting purposes bonds and debt service are allocated based on capital budgets.

2018 Forecast 2019 Forecast 2015 Approved Budget 2016 Forecast 2017 Forecast $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 2015 Approved Budget

Debt Service

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BOND ISSUES (in thousands of dollars)

Electric $ 28,256 $ 52,243 $ 28,512 $ 3,786 $ -Natural Gas 8,208 8,257 8,757 8,949 7,045 Water 68,315 25,327 34,954 39,406 17,476 Wastewater - - 530 374 1,750 Streetlighting - - - - -TOTAL $ 104,779 $ 85,827 $ 72,753 $ 52,515 $ 26,271

Bonds are typically issued for the general system (with the exception of SDS) and not specific to service. For forecasting purposes bonds and debt service are allocated based on capital budgets.

2015 Approved Budget 2016 Forecast 2017 Forecast 2018 Forecast 2019 Forecast $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 2015 Approved Budget

2015 ANNUAL OPERATING AND FINANCIAL PLAN