Drier conditions and hotter temperatures the last few weeks should better balance Cleveland Utilities’ accounting ledgers for August and September, but surprisingly heavy rainfall amounts and sluggish thermometers in July brought more of the same as the previous year — low sales volumes.
According to a financials report filed in a recent Cleveland Board of Public Utilities monthly session by Sr. Vice President and CFO Ken Webb, the month of July was a poor start for the new fiscal year.
“Weather continued to play a significant role in determining the sales volume for [the] Electric, Water and Sewer [divisions] in July,” Webb said.
The month saw not only lower-than-normal temperatures — which translates into less air conditioning use by CU customers, meaning less revenue — it also saw the opening of a floodgate of precipitation in Cleveland and Bradley County.
Traditionally in July, showers are far and even further in between. But this year, the Cleveland Filter Plant measured 10.9 inches for the month which allowed CU customers to use less utility-supplied water for irrigation, pools and flower beds.
Although good for CU customers who benefitted from smaller bills, it greatly impacted the utility’s anticipated revenue which was figured into budget projections.
“The 10.9 inches of rainfall we experienced caused electric volumes to be 92.6 percent [of projections], water volumes to be 77.6 percent and sewer volumes to be 85.4 percent when compared to the comparable numbers in July 2012,” Webb said. “These kinds of percentages obviously translated into revenue numbers coming up short of expectations.”
CU was already coming off a fiscal year of poor performances in revenue due to 2013’s heavier rainfall and cooler temperatures. Getting off to the same kind of start in the new fiscal year which began in July wasn’t what the utility’s primary accountant had hoped.
“In the Electric Division, the reduced revenue and higher than anticipated purchased power cost [from TVA] generated a sales margin of $1,112,203 for the month on revenue of $8,888,165,” Webb said. “We had anticipated a margin of $1,472,000.”
Expenses of $1,372,975 made matters worse, and resulted in the Electric Division recording a net loss of $134,539 for July after the addition of $126,233 in other revenue. Budget net income was $186,045.
During the month, the Electric Division serviced 30,067 customers.
The story was no better in water.
“Decreased water volumes because of the unusually high amount of rainfall in July resulted in significantly lower than anticipated revenue,” Webb pointed out. “Total division revenue for the month was $1,157,967, compared to a budgeted amount of $1,320,501.”
On the upside, Water Division expenses were $1,025,778 less than budgeted. This allowed the division to report positive net income of $132,188 for the month. The budgeted net income was $178,411.
Water service was provided to 30,297 customers in July.
“The Sewer Division fared better net income wise compared to budget than did both Electric and Water for the month,” Webb noted.
He said total division revenue in July was $901,311 and expenses were $785,829, leaving a net income of $115,482. Net income projections had been $30,642.
For the month, sewer service was provided to 17,963 customers.