For Immediate Release: November 21, 2019

SMUD Board of Directors approves 2020 budget

The elected SMUD Board of Directors approved a $1.8 billion budget. The 2020 budget provides funding for all capital and operations and maintenance (O&M) programs needed to meet the Board’s Strategic Direction in the coming year.

As a community-owned, not-for-profit utility, SMUD looks holistically at our budget, programs, projects, and initiatives each year to make sure we deliver value to our community and the 1.5 million people we serve. To fulfill that Direction, though, especially during this time when the electric utility industry is in transformation, strong financial management is imperative.

As a result, the 2020 budget is $96 million higher than 2019 mostly due to higher commodity and O&M expenditures, especially those related to funding for investments and programs to support the SMUD Integrated Resources Plan (IRP). The IRP will benefit our community by SMUD reducing carbon emissions to 1.35 million metric tons by 2030 and achieving net zero emissions by 2040. The plan will invest $6.5 billion dollars over the next 20 years to accomplish it, including spending on electric transportation incentives and building electrification programs. The budget also funds customer outreach and education for these items.

Heightened focus on wildfire mitigation efforts and higher insurance premiums are also contributing to the increased O&M budget as well as funding for ongoing grid modernization and cybersecurity improvements. Community enhancement efforts like Sustainable Communities, the California Mobility Center, support for the Science Center and the new childcare center are also included in the budget. These efforts all maximize community impact and also help to ensure every dollar we spend delivers value in terms of equitably serving our community.

The 2020 budget also funds capital projects that will deliver increased reliability to the SMUD electrical system. These include completing the construction upgrade of two major bulk substations—E in midtown and G downtown; ongoing system-wide cable replacement; distribution system expansion and upgrades downtown; upgrades for the White Rock tunnel in the SMUD Upper American River Project hydroelectric system; and expanding Solano Wind generation capacity.

SMUD continues to be in a strong financial position. Fitch and S&P rate SMUD’s credit worthiness at AA, while Moody’s continues to rate SMUD Aa3. To maintain these credit ratings, which continue to be the highest in three decades, SMUD has a strategic financial target to maintain strong net operating revenues to cover its fixed costs. Forecasted 2020 fixed charge coverage—net operating revenues exceeding fixed costs is 1.69 times, which exceeds the SMUD Board’s minimum target fixed charge coverage of 1.5 times net operating revenues and supports a higher level of proposed capital spending. The higher credit rating produces a lower cost of borrowing.

SMUD's rates are among the lowest in California, and on average are more than 35 percent lower than those of neighboring PG&E (see chart below).

As the nation’s sixth-largest, community-owned electric service provider, SMUD has been providing low-cost, reliable electricity for more than 70 years to Sacramento County (and small adjoining portions of Placer and Yolo Counties). SMUD is a recognized industry leader and award winner for its innovative energy efficiency programs, renewable power technologies, and for its sustainable solutions for a healthier environment. SMUD’s power mix is about 50 percent non-carbon emitting. For more information, visit SMUD.org.

Comparison of California Utilities’ Average Residential Electric Bills

Monthly Average Residential Electric Bill

at 750 kilowatt-hours (kWh) per month

As of September 1, 2019

SMUD

$113.79

Roseville Electric

$113.00

Turlock Irrigation District

$116.37

Modesto Irrigation District

$136.03

Southern California Edison

$156.84

Los Angeles Department of Water & Power

$157.18

PG&E

$184.23

San Diego Gas & Electric

$224.68