January’s unseasonably mild temperatures worsened the public utility’s seasonal sales numbers in all three major divisions — Electric, Water and Wastewater, according to Ken Webb, chief financial officer who now carries a dual role as CU assistant general manager.
In a recent report to the Cleveland Board of Public Utilities, Webb pointed to significant sales drops in the Electric Division, 17.6 percent; Water Division, 6 percent; and Wastewater Division, 8.1 percent. While smaller utility bills are good for the customers, it creates added challenges for the public company.
In the winter season, sales volume traditionally dries up in the water and wastewater divisions, but electric normally soars due to increased power usage to heat homes. However, because January’s temperatures were milder than normal, Cleveland Utilities sales took a triple hit.
Sales volume in January dropped to 91,969,705 kilowatt-hours which represents a 17.6 percent decrease compared to the same month in 2011, Webb reported. For the month, the average residential bill was $141.77 as compared to $205.42 a year ago. This represents a 31 percent decrease.
Revenue for the month was $8,025,037 and power purchased from TVA cost $6,584,191, leaving a margin between sales and wholesale power cost of $1,440,846.
“Purchased power as a percent of sales revenue was 82 percent and is tracking at 83 percent year-to-date,” Webb said. “Both of these numbers are better than the projected 85 percent in the current year’s budget.”
Again, this translates into less electric demand. Cleveland Utilities customers needed fewer kilowatt-hours for heating and this required CU to buy less power from TVA.
Other Electric Division revenue for January totaled $117,920. Expenses other than purchased power were $1,317,163, leaving a positive change in net assets of $241,603.
“The year-to-date change in net assets is a positive $1,927,456 and is the result of the lower-than-anticipated cost of wholesale power and operating expenses which so far have been approximately $328,000 less than budgeted,” Webb explained.
Volume in the Electric Division on a year-to-date basis is down 6.5 percent from January 2011 with residential usage leading the way with a 12.3 percent decrease.
In January, the Electric Division reported 29,626 customers, up from 29,291 a year ago.
electric rates down
In a related development in residential retail electric rates, Webb said TVA power pricing for the next month will be calculated at 8.541-cents per kilowatt-hour. This represents another kwh price drop. Since December 2011, kwh pricing has dropped four consecutive months. In December, the TVA price was 9.092 cents per kwh.
Webb said this translates into a 3 percent price reduction to customers. The average residential electric customer will save $3.24 on 1,140 kwh used in March, he offered.
“That’s good news [for the customers],” Webb said. “Not a lot of things are going down [in price].”
Sales volume in January was 199,282,500 gallons of water, representing a 6 percent drop from last year. The average retail price to customers was $4.50 per 1,000 gallons. For the month, the Water Division reported 29,901 customers.
Total division revenue for the month was $973,544 with expenses totaling $1,037,680 for a negative change in assets of $64,136.
Ironically, although it was a revenue loss, it was good news based on prior projections.
“This is encouraging as the loss had been projected to be $77,133,” Webb explained. “As I mentioned last month, it is important at this time of year [that] losses not exceed what had been projected as there is only one month between now and the end of the fiscal year that we can reasonably expect to have positive results.”
The Water Division budget is also seeing some additional good news.
“Two miscellaneous revenue accounts in water — sprinkler taps and fees, and access fees — continue to outperform the budget,” Webb said. “I am encouraged by these two accounts as the miscellaneous accounts are important to the overall results.”
Sprinkler taps refer to the connection of new irrigation systems to the CU water system and access fees refer to new-construction hookups to the public utility’s existing lines.
Sales volume in sewer was 135,032,250 gallons which is an 8.1 percent drop from last January. For the month, CU reported 17,700 wastewater customers who paid an average price of $5.63 per 1,000 gallons used.
The division’s total revenue for the month was $815,718. Expenses were $804,967, giving the division a positive change in net assets of $10,751.
“We had projected a positive $31,185, but slightly higher-than-anticipated expenses in both the wastewater treatment plant and collection systems’ operating and maintenance accounts prevented us from meeting the projected amount,” Webb said.
He added, “The YTD numbers in sewer reflect a positive change in net assets of $377,157. This is short of the YTD projected amount of $494,113 and once again is the result of higher-than-anticipated maintenance costs.”
still looking up
Webb said CU access fees in the Wastewater Division — a long-accepted sign of construction activity which translates into economic recovery — continue to fare well locally.
“I am very pleased to report access fees on a year-to-year basis are exceeding the budgeted amount and the comparable amount from the same time last year,” Webb stressed. “This is a good indicator of positive growth for both the system and our service area in general.”