Danville Utilities customers will have the opportunity this week to view a presentation on the financial health of the city’s five utilities. A consulting firm made the presentation last week to the Danville Utility Commission.
River City TV will air the presentation as follows:
• Monday, Dec. 1 – 8 p.m.
• Wednesday, Dec. 3, -- 8 p.m.
• Friday, Dec. 5 – 8 p.m.
The presentation began airing last week. River City TV is available on Comcast cable channel 10, Gamewood cable channel 122 and streaming at www.rivercitytv.org.
The City of Danville undertakes a study of utility rates every two years. Monday’s meeting was the first in a series that the Utility Commission will conduct in the study. The Utility Commission meets the fourth Monday of each month, and each meeting is open to the public. For added transparency, the city plans to broadcast the rate study presentations and deliberations via River City TV. The next meeting of the commission will be in January.
The city has contracted with a new consulting firm, Utility Financial solutions, to take a fresh look at the city’s electric, gas, water treatment, wastewater treatment, and telecommunications operations. Utility Financial Solutions is a Michigan-based firm that provides financial planning, cost of service and rate design services to municipalities across the country.
Monday’s presentation focused on the overall financial outlook for each utility. The outlook addressed projections for revenue, expenses, operating income, cash balances, capital improvements and debt coverage ratios.
Dawn Lund, the firm’s vice president, told the Utility Commission on Monday that a review shows that four of the city’s five utilities will require small, staggered rate increases over the next four years to stay healthy. The four are electric, gas, water treatment and wastewater treatment.
“Of the four, projections show wastewater would need the quickest attention,” Lund said.
She recommended a 3.5 percent increase in revenue for the city’s budget year that begins July 1, 2015. A second increase of 3.5 percent would be necessary two years later, according to current projections.
For electric, gas and water, the first revenue boosts could wait until July 1, 2016. At that time, projections show a need to increase 1.5-percent increase in revenue for electric operations; for gas, 2 percent; and for water, 3 percent.
Additional revenue boosts of 1.5 percent would be necessary the following two years. Additional revenue for gas and water would be necessary effective July 1, 2018.
“The rates I am recommending are at the rate of inflation or less,” Lund said. “The philosophy is to stagger the rate increases, slowly building up to where we need to be.”
Lund said if nothing is done to stabilize and build operating income levels, then the city could face a situation down the road in which double digit increases are necessary.
The percentages suggested by Lund are the amount needed to boost total revenue for each utility. Early next year, the firm will present recommended rates for each customer class – residential, industrial, etc. – necessary to generate the total revenue.