WM Utility turning a profit in 2017

WM Utility turning a profit in 2017

Numbers up after down year

news@theeveningtimes.com

Figures from the profitand- loss sheet at the West Memphis Utility Department are twice as good as last year.

Utilities General Manager Todd Pedersen rolled out the positive news to commissioners during the board’s October meeting.

After being surprised by a big loss last year, commissioners ordered a monthly recap to monitor P & L moving forward.

Profits through June this year stood at $272,540, a complete flip from a loss through the first six months last year to the tune of $276,892. The numbers this year reflect a 198 percent increase. If that wasn’t enough good news, a glance at the operating income line made for an even prettier picture.

The operating line showed a 412 percent improvement matched against the first half of last year. 2016 was an operating downer, in the hole an average of $20,000 each of the first six months. But 2017 has been a complete turnaround, an average of $64,000 each month

Utilities Manager Todd Pedersen through the halfway point, for a total $383,800.

Utility Commissioner Susan Marshal added the year-to-date profit and operating numbers produced by the utilities administration, and delivered a good news perspective to the other commissioners.

“We are basically $500,000 over last year,” said Marshal. The news was so good she was skeptical.

“Makes you think there was something wrong with last year,” said Marshal.

Pedersen reminded the commission he had announced in early 2016 abnormal energy prices.

“We were actually reporting to you all back then that we running the coal plants, selling electricity, knowing we were losing money, just because we had a minimum amount of coal we had to take,” said Pedersen.

“I started looking at last year,” said Pedersen. “I did a cost analysis comparing what my customers paid per kilowatt hour, per month during 2015 and ‘16. I noticed in 2015 we paid .0726 cents per kWh, but 2016 a quarter of a penny less per kWh. So I sold the same amount of energy but it resulted in about a million dollars less revenue.”

West Memphis Utilities passes along savings on energy costs through fuel cost adjustments. The charges each month stem from a $6-per-month meter charge, plus 6 cents for the fuel adjusted price for energy used through each meter.

“If costs from the coal plants coming in are really low, I pass that savings on to the customers,” said Pedersen. “It effects us because now I’m not collecting the dollars I had been collecting. If the cost of the energy is really low, we pass the savings onto customers. But it effects us.”

The rate structure impacts the big swing seen on the bottom line over the last three years.

“That’s just how it is,” said Pedersen.

Write-offs have been big in recent years. Measures to reduce bad debts have been put in place. Councilman Wayne Croom asked about the impact of the new procedures.

“Do we have write-offs on here?” asked Croom.

“The write-off hit the month of August statement,” said Pedersen. “So when we do the third quarter report, that’s when you will see it as an expense.”

Pedersen put the six-figure year-to-date profit in perspective. The GM projected modest profits for the year.

“As it is, we are on track to make about two percent,”

said Pedersen.

By John Rech