“A good month is the way I would describe the financial results for August,” said Ken Webb, manager of CU’s Accounting Division. “I think everyone would agree if weather has anything to do with results, August was a month we would have expected to be good.”
He added, “Rainfall was limited and temperatures were hot, even for August.”
And that set the stage for CU’s continuing rebound that started in July, the first month of the new fiscal year. Webb’s promising financial report came Wednesday during a formal monthly session of the Cleveland Utilities Board at the Mountain View Inn.
In the Electric Division in August, CU’s sales volume jumped 14.1 percent from a year ago, and for the new fiscal year it is up 10.6 percent. The improved percentages were anchored by the sale of 113,650,019 kilowatt-hours to 29,159 customers; this calculates to an average price of 8.5 cents per kilowatt-hour.
Total electric sales revenue for the month was $9,665,324. The wholesale power bill from TVA was $8,324,941, leaving a margin of $1,340,383. Revenue from other sources was $132,350.
Electric Division expenses, not including purchased power, tallied $1,180,648. This left a net income of $292,085.
“The budgeted net income for the month was $259,441, meaning it was a better month than projected,” Webb explained.
Two months into Fiscal Year 2011, the Electric Division has sold 219,877,661 kilowatt-hours and the resulting net income was $570,886. The numbers are good for now, but the moderating weather doesn’t bode well for a continuing performance.
“As we have seen so far this week, the weather has changed to a more seasonable pattern and I do not expect to see results such as July and August to continue on indefinitely,” Webb said. “There are some months in the Fiscal Year 2011 budget projecting a loss and these good results in the early part of the year will be challenged if volume decreases and losses are incurred.”
Water Division
The news is just as promising for CU’s Water Division which struggled early in the summer with surprisingly low volumes. Webb described the August numbers as showing a “strong demand for water,” undoubtedly linked to the month’s drought and hot conditions.
Volume for the month was 290,115,000 gallons, up 13.6 percent from a rainy August a year ago. The average price paid for water by 29,545 customers was $3.72 per 1,000 gallons of water.
“Total revenue in the division for the month was $1,152,558 which represented 101.5 percent of the budget for the month,” Webb said. “Total expenses for the month were $979,557, leaving a net income of $173,001.” The net income budgeted for August was $87,403.
On the fiscal year, the Water Division is overflowing with good news. Volume for the first two months (July and August) is 578,730,000 gallons.
“This is an encouraging 8.1 percent over the volume for the first two months of 2010,” Webb stated. “Only three of the remaining 10 months in Fiscal Year 2011 have positive net income projections so getting off to a good start is very helpful as I fully expect net income numbers to decline as projected.”
In spite of the positive news, Webb kept his sense of reality.
“As good as the results are (in the Water Division), I would still caution about weaknesses in our situation,” the accounting professional warned. “Access fees (taps into CU water lines by new customers) are a good measurement of new growth in our service area. Although year-to-date they are right on target, we have to remember that the target this year is smaller than in past years and had it not been for over-budget results in July that offset the under-budget August results, we could have been behind on this line item early in the year.”
Wastewater Division
Again, CU’s news is encouraging as the new fiscal year unfolds.
Sewer volume was 176,143,500 gallons representing a 12.2 percent jump over August of last year. The customer count for the month was 17,342 and the average price paid for sewer service was $4.64 per 1,000 gallons. Revenue in the division was $859,994 and expenses were $751,272 for a net income of $108,720.
For the first two months of Fiscal Year 2011, sewer volume is 5.5 percent as compared to the first two months of 2009. Net income for the same period is $243,063 and is ahead of budget projections, and it is ahead of last year’s comparable two-month results.
“Year-to-date access fees in sewer are slightly ahead of budget, but only because of a strong showing in July,” Webb said. “The August access fee numbers were short of budget and it will be interesting to see where the September results shake out when those statements are run.”
