Armchair quarterbacking has never been a practice for retiring Cleveland Utilities President and CEO Tom Wheeler, nor does he believe in telling others how to do their jobs, but the 43-year CU veteran does encourage his successors and local government leaders to look ahead.
As many improvements as CU has made to its own operations over the years, and as much economic development and community progress as the utility has helped to launch, much more work remains. And it will include some difficult debates and “bold decisions” by area politicians, the outgoing CU helmsman warns.
Set to attend his final meeting today of the Cleveland Board of Public Utilities, as well as a private retirement dinner tonight, Wheeler’s retirement officially takes effect Nov. 1. But on Oct. 1, his leadership duties and responsibilities will be transfered to his successor, Ken Webb, a longtime CU administrator serving as senior vice president and CFO.
“Forty-three years is a long time and I’ve done something that I really enjoyed doing all these years,” Wheeler told the Cleveland Daily Banner. “I’ve always enjoyed coming to work. Two years ago I didn’t think I’d be retiring at this time ... but you just wake up one day and you know it’s time to go. You get a feeling that it’s time for you to leave.”
As excited as he is about his own retirement, Wheeler admits he’s just as enthused at seeing Cleveland Utilities being run by someone new.
“I think it’s good to have some new ideas,” he said. “It’s time for me to move out of the way and let somebody else come in with some new ideas and new ways of thinking that will keep things going.”
Those latter three words — “keep things going” — were the crux of much of what may be Wheeler’s final media interview as CU president and CEO. He used the opportunity, in response to questions from the Banner, to offer some key suggestions to those who will lead the utility — and the Cleveland and Bradley County community — in the future.
Without assigning an order of importance, Wheeler pointed to a handful of priorities he believes the Cleveland Board of Public Utilities, the Cleveland City Council and the Bradley County Commission should be prepared to address now and in the short- and long-term future.
1. From a utilities perspective, develop a plan — and implement it — to provide a quality wastewater collection (sewer) system in the southern portion of Bradley County.
2. From a utilities perspective, keep a watchful eye on ways, with the right timing, to expand CU’s services into broadband and communications services much like other utilities such as Chattanooga’s Electric Power Board are now doing.
3. From a utilities perspective, maintain an appropriate level of debt service by Cleveland Utilities — one that will provide reliable services, opportunities for continued economic development and competitive user rates, yet whose repayment load is “manageable.”
4. From a utilities perspective, maintain CU’s image as a community utility, one that is professional, reliable and accessible to customers and the public.
5. From a community perspective, maintain a progressive attitude and an ongoing commitment toward economic development and growth.
Wheeler discussed each in detail based on his own personal involvement in two capacities — as CU president and CEO, and as a principal player in partnering with the Cleveland/Bradley Chamber of Commerce and the Bradley/Cleveland Industrial Development Board for continued business growth and economic development.
for southern end
“The biggest challenge for Bradley County is to get some kind of wastewater system in the south part of the county,” Wheeler said. “Some of that undertaking needs to be taking place now. We’ve got the northern half taken care of pretty well, but our ability to expand southward is not there.”
It’s not just about doing the environmentally right thing of eliminating septic tanks. It’s also about providing wastewater services necessary for growth toward the county’s southern end.
“If Cleveland and Bradley County are going to continue to grow, we’re going to have to be able to grow toward the south,” he stressed. “That’s not the kind of thing that can be done overnight. It’s going to take some long-range planning. It’s going to take some commitment on the part of politicians.”
Wheeler said it will require the same level of commitment made in 1980 when the old Cleveland City Commission made what he described as a “... bold decision to move the wastewater plant from the city limits of Cleveland to the Hiwassee River.”
“We had plans on the drawing board to expand the existing plant on Mouse Creek Road where the soccer fields are now,” he reflected. “About halfway through that process, somebody ... and I can’t remember who the person was ... said you need to consider moving the wastewater plant to the Hiwassee River.”
He added, “That was really a stretch. It was a great leap. We didn’t know how we were going to pay for it. But it was done. It was paid for. It is being paid for. The implications of that decision on economic development and growth in Cleveland and Bradley County has been ... you just can’t hardly measure.”
The commitment was “... people stepping out there with a bold move,” Wheeler said. “It’ll take a similar move to provide service to the south end of Bradley County.”
Such a service would require a new wastewater treatment plant for the southern end. Some 33 years ago, the cost for a treatment plant on the Hiwassee River was about $25 million. Wheeler didn’t speculate on a potential cost at today’s prices.
“That [decision] was made at a time when the utility was only generating about a million and a half dollars a year,” he pointed out. “It was a huge decision from a financial standpoint.”
Wheeler compared the local need to the neighboring Hamilton County Sewer System which operates independently of the sewer system in Chattanooga, the county seat.
“We need something similar in Bradley County,” he said. Such a project would fall beyond the scope of the city of Cleveland because the areas to be serviced would be outside the municipal limits, Wheeler noted. Its start would have to come through Bradley County government.
Expand CU services
“Something that’s out there on the horizon for Cleveland Utilities is the decision on whether or not we’re going to get into delivering broadband (high-speed Internet) and communications services,” Wheeler said.
Such a commitment would line up CU as a competitor to Charter Communications and Comcast just as Chattanooga’s EPB has done with its own state-of-the-art fiberoptics system.
“We’ve looked at it three different times over the last 10 years and all three times we’ve decided not to make that move,” Wheeler said. “If we had done it the first time we would have built a system ... that already would be obsolete.”
That’s because it would have been designed using pre-fiberoptics technology. Now, CU already operates its own internal communications system with about 60 miles worth of fiberoptics. He called it a steppingstone for entering the broadband industry should CU, the city of Cleveland and the utility board have an interest.
“The fact that we haven’t already gotten into it is not entirely a bad thing,” Wheeler said. “I’m hoping the state laws will change in a way that will make it easier for a municipality to enter into broadband services.”
an ongoing priority
Currently, Cleveland Utilities is about $60 million in debt due to many years of growth and updates to its ever-expanding system.
“Obviously, we have incurred a lot of debt in these last years,” Wheeler stressed. “... It’s primarily in wastewater [improvements]. This is debt that was used to help clean up the environment.”
It was also used to extend utility services into annexed areas. As an example, Wheeler pointed to one 10-year period when Cleveland Utilities was completing two to three “Plan of Services” commitments each year in order to provide full utilities as a part of annexation.
“... We are carrying a large debt,” he acknowledged. “One of the challenges of management is to make sure we are carrying a debt load that we can manage ... that we can generate the revenue to pay it off in a responsible manner. There are ways to look at that debt to make sure it meets certain tests based on your income.”
He compared CU’s debt load to an average household.
“The debt you can carry is based on your income,” Wheeler explained. “You have to balance the two and make sure you’re not getting overextended. I think Ken Webb (CU’s chief financial officer and incoming CEO) has done a good job of making sure we haven’t gotten overextended.”
Wheeler said CU uses the value of its operational system to determine the level of debt load it can carry.
“You look at the value of your [utility] system just like you look at the value of your house,” he cited. “If you had a $500,000 house, you wouldn’t want to have a million dollars worth of debt. But, if you had $250,000 worth of debt on a house that was worth $500,000, then you might call that a manageable debt. That’s what we try to do ... we try to keep the debt in ratio to the value of the system.”
For years, CU has carried a debt that was 30 to 40 percent of the value of its system. As long as the debt doesn’t exceed those numbers — based on current system value — then it is considered a “manageable debt,” Wheeler noted.
“You just don’t want to get overextended based on your ability to generate enough revenue to pay off the debt, pay your expenses, pay your employees, pay your fixed costs ... and at the same time keep your rates competitive,” he added.
CU must keep its rates competitive to attract new businesses and industries into the community.
“If our rates get out of hand, somebody’s not going to bring a new factory to us if they can go somewhere else cheaper,” Wheeler stressed.
Protect CU image as
a community utility
“I’ve always tried to make Cleveland Utilities a community utility,” Wheeler said. “We are unique in the fact that we don’t have stockholders. The people who own Cleveland Utilities are the people in Cleveland. It’s a community utility, and we’ve tried to make it that way.”
He added, “The people who work here are customers’ friends, neighbors and relatives. One of the things we’ve been able to offer is that small-town service. If you’ve got a problem or some kind of situation you need to deal with, all you’ve got to do is get on the phone and call somebody here ... or come out here and you can talk to the boss. You don’t get that at very many places anymore.”
Wheeler said protecting this image is important for the local utility.
“Cleveland Utilities is a real asset to the community,” he stressed. “It was an asset while I’ve been here. It will continue to be an asset after I’m long gone.”
to economic growth
“It’s important that the city and county leaders continue to do things and make decisions that foster growth,” Wheeler said. “The one thing I’ve learned in this job, in the parts I’ve played in economic development, is that you can’t stand still. You can’t ever grow enough ... to a point where you can say, ‘We’ve grown where we need to, and we’re not going to do it anymore. We’re happy with where we are.’”
He added, “The minute you make that decision you’re going to start going backward. You’re either going forward or you’re going backward. You’re not standing still.”
To make his point, Wheeler referenced a list of existing industries in Cleveland that were operating when he first joined Cleveland Utilities in 1971. Most no longer exist. Hence, it’s the purpose of continued economic development and community growth to attract new industries whose arrival will offset the loss of departing businesses, he said.
“It’s important that the politicians, the leaders don’t get tempted to say, ‘Hey, we’ve got enough,’” Wheeler stressed. “The minute you do that, you’re going to be in a state of decline.”
Although many recognize Cleveland Utilities’ primary service to the community as being the provider of electricity, water and sewer assets, the public company is also heavily involved in economic development and growth. It’s a commitment that needs to be nurtured while maintaining a strategic balance with debt load and accountability, the future retiree believes.
“I accomplished just about everything I wanted to accomplish to make sure Cleveland Utilities was in good shape, physically and fiscally ... physically, like the system, and fiscally, from the money standpoint,” Wheeler pointed out.
He added, “I’ve really enjoyed working with the people I’ve dealt with ... the City Council members, the county commissioners, the industrial customers we have and the residential customers. I’ve enjoyed my relationship with all these different groups.”