No rate increase for WM utilities expected even with 2016 losses

No rate increase for WM utilities expected even with 2016 losses

Despite dip in revenue, ‘ the utility is financially stable.

We are not contemplating any increases,’ says manager

news@theeveningtimes.com

When you lose $700,000, you have to monitor things a little closer. That’s what the West Memphis Utility Commission is doing after the department showed a significant drop in revenue in 2016 compared to a relatively robust 2015.

Commissioners reacted to the red ink by asking utility officials to more closely track revenue verses expenses. Utility Department General Manager Todd Pedersen went right to work and provided some background at the commission’s September meeting, with results for the last two years and year-to-date figures.

While seasonally mild weather drove sales down during August compared to 2016, electric sales have driven the company back into the black this year. The bottom line is still positive.

“Our sales were down about $200,000 for the month of August,” said Pedersen. “For the year we are still up about $400,000.

Year-to-date through July we are about $540,000 in the black on a revenue verses expenses basis through July.

The budgeted revenue and expenses were on track and about even. Revenue stood at 55.23 percent of the annual budget and expenses 55.22 percent of the planned budget.

Pedersen said electric sales cover consistent losses in water and sewer departments.

“Ninety percent of our revenue is from electric, water and sewer and are about five percent each,” said Pedersen. “Our water and sewer rates are not meeting the expenses of those departments.”

Commissioner Susan Marshall took the year-to-date numbers under advisement, with a reminder that the 25year-old, 300,000-gallon Mid-America water tower will be undergoing a $500,000 refurbishing later this year.

The utility finished 2016 with a short fall — West Memphis Utilities was down $713,000 last year.

Sewer works alone cost the utilities $1,000,000 last year, while the Water Department lost nearly $300,000. While electric sales were up, it was not enough to float the moneylosing

services of water and

sewer.

“So our revenue is on track with last year… so, will we be off again this year?” asked Marshall.

Pedersen offered a monthby- month historic analysis. “I don’t understand why the revenue dropped off when my revenue dropped off because electric sales were still up,” said Pedersen. “These figures show cash in and cash out. It’s like a check book. If I am bringing in more money than I am spending, then I am doing good. Our kilowatt hours are the same.

So, with red on the charts showing water and sewer not paying for itself, is the city utility considering an increase?

“Electric is subsidizing water,” said Pedersen. “For the last several years, until last year, the utilities is making money, even with our electric rates the second lowest in the state. The utility is financially stable. We are not contemplating any increases.”

City Treasurer Frank Martin backed up Pedersen and explained why no rate increases would be considered for years.

“I think if you were to adjust any rates you’d have to look at the whole thing and we have firm pricing (on electric) through 2021,” said Martin.

By John Rech