DU expects cash to decrease 16% by end of '08
By Catherine Godbey
email@example.com · 340-2441
For Decatur Utilities, a projected increase in water sold doesn't translate into an increase of cash available at the end of the year.
That's what Steve Pirkle, DU finance manager, told the DU board Wednesday when it approved the five-year budgets for the water and waste-water departments.
In analyzing the projected budgets, Pirkle compared fiscal 2008 to the 12-month period from July 2006 to June 2007.
According to the water budget, projected cash remaining at the end of 2008 will decrease 16 percent to $3.6 million. Even so, DU plans for residential rates to remain at $1.94 for every 1,000 gallons consumed.
In the water department, a combination of expected chemical costs and service improvements increased anticipated expenses by 6.2 percent.
Cost of chemicals
"If you look at the past couple of years, the cost of chemicals continues to rise," said DU General Manager Stan Keenum.
DU uses the chemicals to treat water consumed and waste water expelled by residential and industrial customers.
Other expenses include replacing water pipes that will serve the future site of Calvary Assembly of God.
Replacing the existing pipe from U.S. 31 and Alabama 20 to Calvary's site on Alabama 20 west of Interstate 65 accounts for $470,000. Gary Borden, DU's gas, water and waste-water manager, views the project as necessary to serve Calvary as well as industries that may locate on Alabama 20.
As the water treatment plant prepares to distribute an increase in water, the waste-water treatment plant anticipates a decrease in business.
"We are expecting a 1 percent drop in sales due to Delphi decreasing its usage, which will continue to decrease," Pirkle explained.
The expected closing of Delphi eliminates a major industry that employs DU to treat waste water. Pirkle anticipates sales to decrease from 4.43 billion gallons in the comparison period to 4.38 billion gallons in fiscal 2008.
Spurred by the updated sewer ordinance, DU expects revenue to increase despite decreased sales. The ordinance, if approved, would administer a surcharge fee to industries that exceed limits on chemicals allowed in their waste water. Examining samples from industrial waste water will let DU determine the amount of chemicals present, Keenum said.
Including the surcharge fee, the budget shows revenue increasing by 3.9 percent to $10.28 million. Without the proposed fee, revenue would be $9.97 million.
The surcharge fee would allow DU to spend more on suggested plant alterations resulting from a waste-water treatment plant optimization study.
DU hired ADL Inc., an engineering company, to perform the study, which focused on the causes of the odor that the plant emitted earlier this year.
Recommendations made by ADL account for 89 percent, or $840,000, plant improvement expenses in 2008. The improvements include air diffusers and chlorination controls that will bring more oxygen into the plant and produce a less intrusive odor.
Board members hope spending money on equipment now will improve the plant's production and prevent excessive expenses in the future.
Combining the decreased sales, surcharge fee and equipment costs means an expected decrease of cash available by 10 percent to $2.92 million.
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