PUC changes

accounting

Procedure seeks to provide better picture on revenue and expenses on annual basis

By RON LARSEN

Journal Staff Writer

NEW ULM -- New Ulm's Public Utilities Commissioners Tuesday got their first look at the Utilities Department's preliminary 2001 financial report which features a new accounting maneuver that places revenue into the same month as the usage.

Utility Accountant Kris Manderfeld said unbilled revenue adjustment was being tried to obtain a more accurate picture of revenue and expenses on an annual basis.

The problem has been that with the department collecting the revenue for monthly energy usage in the following month, the year-end financial report is distorted, she explained.

The issue was raised by Commissioner William O'Connor who said, "There are a lot of people out there that feel we're sitting on a $1 million slush fund." He was referring to the revenue bulge over expenses in the natural gas fund that carried through into late 2001.

"There never was an excessive amount of revenue sitting in the gas department," Manderfeld countered. "In the past, the revenue collected for usage in December showed up in the January financials. This is an attempt to better show what is happening."

In fact, she said, the $1.3 million increase over budget in the natural gas fund was offset by $1.3 million in increased fuel costs. The fund shows a net income of $280,679, after $430,122 is deducted for transfers to the city in lieu of taxes.

Total natural gas revenue amounted $8,629,777 which is $1.38 million over budget and more than $1.6 million above last year's revenues. Net income before transfers amounted to $710,801, which is 58 percent higher than in 2000.

"You can't take just the monthly financials as they're a snippet of time," Manderfeld said.

"Maybe we should have a footnote on the financials that these figures don't mean anything," O'Connor said.

"The system was stretched to the extreme, even the fuel cost adjustors failed to work," Manderfeld said. "These financials do mean something."

Net income for the Utility Department was $1,512,349, just 5.9 percent short of the budgeted net income of $1,602,681. "I believe this is the closest we've ever been to budget, and I'm really proud of the staff," Stevenson said.

O'Connor also reported receiving a half dozen or more calls about the high gas bills people are getting.

Utilities Director Robert Stevenson said the higher bills are the result of the "locking in" of gas in the futures market last year when "we were facing possibly $10 gas. We locked into a lot of what turned out to be expensive gas in the spring. Then, demand was down, but the price was higher than the spot market so we got bit twice. As we get further into the futures, the price is going down, but it's going down slowly."

The commission will meet jointly with the City Council Tuesday, April 16, to review the city's and the PUC's final audited financial statements for 2001.

In other action, the commission:

* Approved a five-year, renewable contract with HickoryTech cell phone company of North Mankato, allowing the firm to install antennas on the airport water tower. HickoryTech will annual lease payments starting at over $8,600 the first year.

* Approved a natural gas services and procurement contract with the city of Fairfax. Because Gibbon has a contract with Fairfax, the Utilities Department also will service Gibbon, Stevenson said.

* Adopted a regulation making water service and piping repairs more "customer friendly."

* Welcomed new Commissioner Lloyd Schauer and said goodbye to Stevenson who is leaving April 12 to live in Missouri.