DU officials expect little rate changes over next five years
By Catherine Godbey
Decatur Utilities officers presented welcome news to the Municipal Utilities Board on Wednesday.
According to its projection, DU expects gas and electric rates to remain static for the next five years.
Steve Pirkle, DU finance manager, compared the revenue and expenses of future years to the 12-month period from July 2006 to June 2007.
As a result of expensive projects scheduled for the 2008 fiscal year, the speculated net income for the electric department equals $1.35 million, a 29 percent decrease from the comparison period. DU Electric Manager Dan Gibbs attributes the decrease to high-cost projects.
Replacing equipment at the Eighth Street Southwest substation, exchanging single circuits for double circuits on Indian Hills Road Southeast, relocating utility lines on Spring Avenue Southwest and changing out utility poles account for $1 million of the expenses. After replacing the remaining 200 utility poles in its system in 2008, DU estimates the yearly cost of maintaining the poles to decrease from $301,000 to $110,000.
Gibbs describes these projects as one-time or rare expenses. DU will suffer the expenses of another rare project in 2009, when it spends $4.1 million to replace transmitters at the Decatur primary station.
Even with four expensive projects scheduled, Pirkle estimates a net increase of $989,212 from October 2007 to September 2008 as a result of the amount DU retained from the 2007 fiscal year.
While DU predicts the electric department will bring in less revenue than the comparison period, it believes income for the gas department will increase for the 2008 fiscal year. The $762,845 projected net income outpaces the numbers from the comparison period by 41 percent. An increase in sales and a decrease in gas prices fueled the gain.
The majority of expenses in the gas department stem from the installation of gas mains at the future site of Calvary Assembly of God.
Providing gas distribution to the property on Alabama 20 east of Interstate 65 equals an expense of $483,000, said Gary Borden, DU gas, water and wastewater manager.
DU expects to complete the project in the next fiscal year, with Calvary Assembly projecting an occupancy date in April or May of 2008.
Board member Hugh Hillhouse praised the way DU departments balanced their income with their expenses, allowing for a rate increase not to occur.
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