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August 18, 2022

7/1/2022 1:50:00 PM
Utility tagging, taking inventory of assets

Water & Light commissioners met in regular session June 15 and heard that the potential buyer of the “Light” portion of the municipal utility—East Central Energy— will have contractors out and about tagging inventory such as transformers,  and updating GPS data and labeling meters.  So if North Branch Water & Light customers notice people wandering,  they are likely part of “STAR” which is performing the legwork for ECE.

Commissioners were advised these personnel will have badges and identification and should cooperate fully if you need to verify their activities.

North Branch Public Works Director Shawn Williams commented to the three commissioners (Keech and Peterson were absent) that ECE must be pretty certain the proposed sale is going to be completed (see other story) or the cooperative wouldn’t be doing all this.  ECE has even been sending technical representatives to pre-construction meetings held with developers who are coordinating their projects with the city.

And, the water meter swap-out of 604 residential units is proceeding nicely, Williams reported, but the city is still waiting on some commercial meter equipment.  City Public Works Director Williams recently saw the water division of the utility merged in with North Branch’s public works.

Water use daily is running about 750,000 including irrigation, which is the expected warm weather jump from the usual average closer to 550,000 gallons daily, he reported.

In an update with no action, Williams also announced there have been five watermain breaks (most recently on Memorial Day weekend) in the same few block area of Hwy 95.  The commission should be aware of the need to address aging infrastructure, portions of which originate from the 1940s.  

Responding to main breaks can cost around $20,000 each time, according to Williams.  The main in this vicinity can be re-done and upsized to eight inch for about $1.5 million potentially.  The state has a tentative Hwy 95 project for 2027-2028, he continued,  and the preference is to do the underground work before this, or at the same time.  
The commissioners will be reviewing this at future sessions.

The commission did take action on a request for a temporary office person.  

Williams explained the “front desk” and some internal water and electric records need attention.  The utility is contracting (paying) the city costs to supply hours to run the department, but Williams maintained it’s a utility commission decision to hire a temp.  There was $6,000 additional approved in expenses for this personnel request.

North Branch Water & Light Commission heard from its audit firm Abdo, that the utility had revenues in 2021 in excess of expenses in 2021 of approximately $299,000.  Electric receipts through end of year December 2021 were $4.4 million.  Water receipts were $2.1 million.

The audit reported $1.1 million in total utility debt was paid off during last year.  There’s a total remaining for both electric and water divisions-owed principle as of the end of 2021 at $8,687,000, with an additional $1.4 million interest scheduled over the life of the debt.

The financial picture of the utility, including the electric side that is in the process of being sold, that was being painted in the audit is healthy, the commission was advised.  Net position, or difference between liabilities and assets, is $19.5 million on the good side.  In 2020 the audit reported a net position at $18.2 million.

Justin Nilson, CPA with Abdo, walked the commission through a number of accounting concerns, which he added are fairly common issues attached to smaller offices with few staff.  Cash reconciliations were described as a “material weakness,” and advice was to correct the process so it’s done in a “timely’ manner and accounted for properly. The utility needs an itemized inventory, not just an overall aggregated value.  Collateral noncompliance (unsecured by FDIC) was also mentioned and this matter will be corrected in 2022.  One item that increased substantially over 2021 was the expense for general administration, which was up by $665,000 to the end of year.

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