PUC to set 2002 budget

By RON LARSEN

Journal Staff Writer

NEW ULM -- The city's budgetary process for the upcoming calendar year will come to an end Wednesday when the Public Utilities Commission approves the Utilities Department's 2002 budget.

At $29,660,744, it's nearly $1 million leaner than the preliminary budget proposed in October. The reduction in total revenue resulted entirely from a cutback in anticipated revenue from fuel factor adjustments in the Electric Division.

Total operating expenses have been cut by $1.1 million making a total of $28,143,726 in the final budget. Net operating income would be $1,517,018, or nearly $200,000 more than projected in the preliminary budget.

Of the department's six divisions, only Wastewater Treatment is budgeted for a net income shortfall. Revenues in the division are expected to fall $150,039 short of expenses.

District Energy Division, which provides steam heat, leads the way with net income expected to exceed operating expenses by 12 percent. The Electric Division is next at 7 percent, followed by the Water Division at 5 percent and the Natural Gas Division at 4 percent. The Administrative Division's revenues and expenses are expected to even out.

Three divisions meet or exceed the department's net income guideline of 5 percent of gross revenue. Two divisions failed to meet the other general guideline of each division having a positive cash flow.

The new budget projects $21,519,109 in sales to private customers, $3,106,152 in PUC/City sales, $4,955,263 in revenue from fuel factor adjustments and $80,220 in other income.

The department expects to spend $10,421,462 for energy production, $96,712 for transmission, $81,300 for wastewater treatment disposal, $7,709,119 for distribution and treatment, $5,635,073 for administrative and general expense, $1,429,380 in transfers in lieu of taxes and have $2,770,680 in depreciation.

In his cover letter to the commission, Utilities Director Robert Stevenson notes the 2000 bond issue and additional cash required for funding the new 25 Megawatt gas turbine generator has impacted the department's ability to borrow.

"Our ability to borrow has been greatly reduced with the issuance of the gas turbine bonds. Our debt ratios are lower than desired. They should improve when actual savings attributed to the gas turbine begin to appear on our balance sheet. The fast payback, however, should allow a quick recovery to a more healthy position."

In noting that since 1995 there's been a heavy investment in the electric systems, Stevenson said now that trend is ending.

"For Budget Year 2002, we expect capital spending to remain low relative to previous years," he said. "The North Highland residential expansion area development schedule will dictate our spending rates for the next few years."