How does LADWP manage financial risk?

LADWP effectively manages financial risk by diversifying funding sources and maintaining reserve funds. This strategy allows the department to reduce dependency on a single source of income, thereby mitigating potential financial instability from unexpected changes in any one funding stream. By having multiple avenues of revenue, such as bonds, grants, and customer payments, LADWP can better weather economic fluctuations and ensure a more stable financial outlook.

Additionally, maintaining reserve funds acts as a financial cushion. These reserves provide essential liquidity that can be tapped into during emergencies or unexpected financial challenges, ensuring that operations can continue smoothly without significant disruptions or the need for immediate corrective measures.

This approach creates a balanced financial strategy that considers various factors affecting revenue while also preparing for unforeseen circumstances. Such proactive financial planning is crucial in the utility sector, where service continuity and infrastructure investment are critical for community well-being and environmental sustainability.