The Columbus Light and Water board unanimously approved an electric department budget for fiscal year 2017 that includes a $186,000 deficit.
The budget is based on a projected $37.2 million in estimated electric sales revenue and slightly more than $1 million in other revenues.
Expenses included $30.1 million in purchasing power; $2.1 million in distribution and maintenance; $2.1 million in customer accounting, administration and general expenses; $3.7 million in depreciation and taxes; and $365,900 on long-term debt interest.
CL&W General Manager Todd Gale said the electric department has about $9 million in its reserve fund.
Board president Michael Tate acknowledged that running a deficit isn’t ideal but said things could be worse, considering how the loss of local industry has negatively affected CL&W.
“Out of all we’ve been through and all of the crises that we’ve faced, to only be about $186,000 in the negative — no, it’s not great; no it’s not good, but it could have been a lot worse,” Tate said. “At the end of the day with all that we’ve been through, it could’ve been a whole lot worse with the industry that we’ve lost.”
Gale said CL&W is in the final year of a five-year plan to spend an extra $1 million annually in reliability improvements. The department is working to complete installation of new digital meters. Gale said the expenditure, at $2.5 million, is the largest capital expense for a project in the FY 2017 budget.
CL&W will draw $2 million from its reserves for the capital improvements, which Gale said should leave about $7 million in reserves going into FY 2018.
Gale said finishing the meter project should greatly reduce capital improvement expenditures for next year. He noted, however, that the more accurate digital meters might increase maintenance needs and costs that slipped under notice before.
CL&W Chief Financial Officer Mike Bernsen said the electric department’s reserves can help it weather the deficit for the year, but expenses will have to be adjusted in future budgets to prevent further deficits.
“We put everything back into the capital budget, so you’ve got to start with a positive number,” he said. “Thank God we’ve got the reserve that we can pull in, otherwise we would be in trouble. We’ve got to cut back on these capital expenditures or do something to make our profits go up.”
Rejoining NMIDA
The board also unanimously voted to rejoin the North Mississippi Industrial Development Association.
CL&W had been a part of the association, which includes power associations and municipal power companies from 30 counties in north Mississippi, until 2003. At the time, according to board attorney Jeff Smith, CL&W’s board determined that the department wasn’t getting anything in return for its membership and withdrew.
NMIDA provides a number of services, including assistance with economic development, marketing, tech and other support and help with finance packages. The association also works closely with the Golden Triangle Development LINK to assist in economic development.
Gale, when asked for his recommendation, said it couldn’t hurt to rejoin the association.
“With the shape we’re in and needing industry the way we do, I don’t think you can have enough tools in the toolbox,” he said. “I think we needed to get in front of it.”
CL&W board members also agreed that the department could leave after a year if it was unsatisfied with the membership.
CL&W will pay $32,000 in membership dues to the association. The department will pay half of that directly, with the other half provided by the Tennessee Valley Authority.
Alex Holloway was formerly a reporter with The Dispatch.
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