11/29/2018 3:33:00 PM New bond rating 'stable' and no rate hikes next year
The two newly-appointed commissioners for North Branch Water & Light, Peter Schaps and Chris Bibeau, voted last week with the third sitting commissioner North Branch Mayor Kirsten Hagen Kennedy, to accept a budget for next year-- one that does not involve any rate hikes.
General Manager Mark Petsche presented a budget leaving the utility with revenue over expenses at about $300,000.
The utility’s bond rating has been upgraded by Moody’s Investor Services to Baa2 “stable” which is an accomplishment considering the utility’s fiscal situation a few years ago. In 2013 there was “zero” cash on hand. By 2016 this had been built to 134 days and in 2017 it was 162 days of cash available. So-- for next year at least, the notoriously high utility rates in North Branch appear to doing just what the utility needed, and will stay where they are.
Petsche spoke with the commissioners about putting money aside for long range capital needs in the future. The organization does foresee some costly items on the horizon.
There was a brief update provided on finding a contractor for “bullet-stopping” glass at the administrative offices. Employees are harassed and threatened on a regular basis, according to Petsche, who reported “...it’s not letting up much.”
At the October meeting the utility commissioners directed that safety measures be undertaken. There was no specific cost presented last week, but Petsche commented the glass install quotes he’s seen are expensive.
Another capital item will be streetlights being changed-out to LED (light emitting diodes) over the next few years, for a huge energy savings, but at a budgeted $35,000 a year.
According to Petsche MN state law requires utilities to trim one-and-a-half percent of annual kilowatt hours each year, or face penalties. These types of capital investments will help meet that mandate, coupled with customer outreach on cutting back private energy use and offering rebates and incentives for retro-fits improving in-home electric consumption.
The individual meters of both water and electric consumption have advanced greatly and there should be a replacement program, Petsche added.
New water meters store data for 90 days and can alert the utility when there’s a data anomaly that might mean a leak, for example. The ability to go back into the water use history will also help when a bill is disputed, he added.
There are also four streets in North Branch earmarked for new watermain projects, but the utility right now awaits the city moving forward on above-ground improvements. It’s more cost-effective to have streets torn up once and the two efforts can be coordinated.
A priority expense on the electric side of the utility, is to upgrade components facilitating communications between power generating engines and controls. One of three engines in the Water & Light plant is not on-line due to this breakdown, and the facility is at eight megawatts versus 10 megawatts capacity.
The power cooperative that contracts with Water & Light pays the utility based on ability to access a certain amount of power in peaking periods, so revenues are possibly at stake. Controls could be $50,000.
Petsche told the commissioners that budgeted revenues for next year, at $1.9 million, including fees for new connections, are on the conservative side.
He said even though there’s a potential for many new customers-- buying into new housing developments proposed-- the utility also has to expend some funds to serve the developments.
Another bit of good news is the utility has opted for a health insurance plan that will reduce costs to the utility by $34,000 a year. The PEIP or Public Employees’ Insurance Plan has been accepted by staff and even though wage negotiations are on-going for 2019, the health insurance contract has been adopted.
On the issue of the delayed air quality permit, the MN Pollution Control Agency is reviewing additional manufacturers’ engine emission specifications provided by Water & Light as requested. Petsche commented the state has assured him there’s no fine for lack of having a permit, because the delay is now on the state’s end.
The three Water & Light commissioners will meet in special session December 4 at 3:30 p.m. to continue employee contract negotiations. Current contracts expire January 2019.