In a recent formal session of the Cleveland Board of Public Utilities, CU Controller Marshall Stinnett pointed out the utility’s cost of purchased power [from TVA] as a percentage of retail sales increased to 85.3 percent, compared to 82.8 percent in May.
That would indicate CU customers are slowly beginning to crank down the thermostats on their airconditioning as summer temperatures begin to envelope the Tennessee Valley. But, sales weren’t enough — at least, in June — to keep the Electric Division from falling short in budgeted projections for operating margin.
“The results for June are electric sales revenue for the month of $9,225,675 which was offset by purchased power of $7,873,494,” Stinnett reported. “This resulted in an operating margin of $1,352,181. This is compared to a budgeted margin of $1,367,813 for the month of June.”
But over the course of the entire fiscal year which ended June 30, the Electric Division numbers were much closer to budget.
In FY 2014, electric sales revenues were $96,948,390 which was offset by purchased power costs of $80,959,336.
“This resulted in an operating margin of $15,989,055,” he said. “This is compared to a budgeted margin of $16,034,998 or a difference of .286 percent.”
For the fiscal year, budget projections were also almost spot on in purchased power. The CU budget called for payments to TVA to be 83.5 percent of retail sales; the actual percentage for the 12-month period was 83.7.
“During the month of June, the Electric Division exceeded budgeted revenues, but missed budgeted operating margin,” Stinnett said. “For the year to date, the Electric Division missed budgeted revenues and operating margin, but we must remember that because of this total division expenses were also under budget for FY 2014.”
Based on seasonal trends, CU’s Electric Division sales should improve in July and the remaining months of summer as utility customers — residential and commercial — work a little harder to keep their homes and buildings cool.
As he has cautioned in recent financial reports, Stinnett suggested the utility will have to continue to monitor — especially during the transition months — CU’s cost of purchased power from TVA as a percentage of retail sales.
In the transition months, CU customers aren’t as likely to rely on steady airconditioning because outside temperatures are not yet at their maximum. But with July and August come the traditional “Dog Days” of summer and this is when cooling units get a workout.
And the lower the customer thermostats, the higher the electricity sales for the utility company.
For the month of June, the division sold 238,910,250 gallons of water, compared to 240,241,803 as budgeted. This means CU customers weren’t yet being forced to regularly water gardens or lawns, or to rely on any form of irrigation systems. Part of the reason is because temperatures were still mild, but the Cleveland area also received 7.64 inches of rainfall.
Craig T. Mullinax, vice president of CU’s Water Division, reported the month’s rainfall amount actually exceeded 30-day totals for the same period in 2011, 2012 and 2013.
It’s a simple formula. When summer rains fall heavily, and consistently, it puts a major dent in the public utility’s water sales.
The drop in water sales volume resulted in an equal drop in revenue.
Stinnett said water sales in June accounted for $1,060,952 in revenue, compared to the budgeted forecast of $1,217,171.
For the fiscal year (July 1, 2013 through June 30, 2014), water sales revenue totaled $12,258,704, which fell short of budget projections of $12,628,644, or 2.92 percent.
Although Cleveland area rainfall totals were heavy in June, Mullinax pointed out the year’s total so far is lagging behind the annual normal by about 2.19 inches. At this rate, 2014 could finish with 54.29 inches of rain which would be above normal by less than one-tenth of an inch.
For June, the division billed for 153,865,500 gallons of wastewater, compared to 165,570,236 gallons that were budgeted.
“This resulted in wastewater treatment revenue for the month of $842,900 [plus or minus any meter reading cycle adjustment],” Stinnett said. The budgeted forecast called for revenue totaling $855,051.
“The results for FY 2014 are wastewater sales revenue of $10,045,136, which is compared to a budgeted amount of $10,131,795, or a difference of .85 percent,” he noted.
Stinnett’s next monthly financial report to the CU board [for July] will launch the new fiscal year (FY 2015) for the local utility.
“During the month of June, the Electric Division exceeded budgeted revenues, but missed budgeted operating margin. For the year to date, the Electric Division missed budgeted revenues and operating margin, but we must remember that because of this total division expenses were also under budget for FY 2014.” — Marshall Stinnett