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home : news : news
October 20, 2021

9/24/2021 12:17:00 PM
Water & Light hires firm to value electric division sale
by DENISE MARTIN


Water and Light Commission members were unanimous in approving hiring Power System Engineering to consult on a potential sale of the North Branch electrical plant equipment and assets.  Talks continue with East Central Electric which has tentatively agreed to split the $70,000 estimated study cost.  Power System Engineering was the only proposal the utility commissioners considered.

Andy Olson, of ECE, attended last week’s utility commission meeting and reported ECE has questions still needing to be answered, but if all goes according to plan the cooperative will share the study 50-50.

A lot of information gathering needs to happen;  such as valuation of electrical system equipment, rate schedules for both North Branch and ECE, what— if any— future capital projects are on deck,  and costs for integrating the ECE and North Branch systems, plus current condition affects the value of the system.  Costs for continued SMMPA agency power supply versus standard costs for Great River Energy power supply will be analyzed.

If the study can get underway yet this month, the end of the year is the proposed deadline for the study presentation.

Meanwhile the water division of North Branch Water and Light is fully absorbed into municipal operations.
 
Shawn Williams, city public works director, is assuming the title of General Manager for the utility.

GM Scott Hautala is involved now officially as a “consultant.”  He was no longer required to be on-site as of the end of August and is receiving his salary until end of this year.  

Chair for the utility Commission Nathan Keech said there’s been some confusion amongst vendors, employees and customers, as to who is actually the General Manager.  This should clarify that.

Utility bookeepers and administrative staff are moving into North Branch’s city hall, it was announced.  The traditional Water and Light brick headquarters will still have a drop box for payments (to be checked daily) and the utility phone number remains active.  Plans are to also have a payment drop box at city hall too.

ECE linemen are already “shadowing” Water and Light linemen to learn the system. ECE has a contract to fill in when needed,   or when emergency conditions (storm damage, etc.) call for it. All ECE hours will be covered by utility revenues.  Likewise the water operations workers who are now part of the Public Works roster are still being paid by the utility.

You will soon see North Branch municipal logos on utility vehicles.  It was decided not to create a whole new presence for the merged operations and just stick with the city branding.

As for financial aspects affected in this municipal utility formation— Commis-sion members are serving with city officials on a “Transition Committee.”  

This committee is reported on by Chairman Keech as doing the deep analysis to support recommended implementation of new blended policy and operations.  So far, the utility commission has adopted the recommendations.

There’s been utility billing troubles of late.   

It was reported the staff are doing what they can to perform billing and meter reading in a more “consistent” manner during this  switchover.

Customers are upset with a bill that’s well over a month’s worth of use and others get billing that covers a shorter cycle.  

Commissioner James Baxter asked if it’s possible to average out account use and generate bills that contain fewer peaks and valleys.

Hautala responded (appearing on the Internet remotely) that there is a program offering this, but the customer needs a 12 month history on which to average out billings.

Baxter then requested to be removed from the Transition Committee. He said his schedule is getting too full.  Utility Commissioner Peter Schaps was put on in his place.

There was conversation at an earlier commission meeting about the drain the electric division is putting on the utility. The Transition Committee had reportedly recommended the sale of the electric system (or at least the generators in the main house, which were cited as the culprits.)

Chair Keech had announced electric debt was “hemorrhaging” the local budget.  In checking prior years’ financial statements, Water and Light auditors calculate electric debt service is eating up 11 percent of revenues in that division.  

Water debt, on the other hand, is consuming 47 percent of water revenues.  There has been no discussion by the utility commission on this.

The utility total debt is at $9 million approximately, according to the 2020 financial statement and audit by Abdo Eick Meyers, the latest figures available.  It breaks down to Water almost $5 million and Electric almost $4 million.



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