What Happens When A City Doesn’t Budget Enough For Your Electric Utilities

From Washington NC, here is a great article about what can happen when a city doesn’t budget enough to maintain it’s electric system.  I’m retelling this story primarily for two reasons: I live in Rocky Mount (and glad we don’t have this problem) secondly, to illustrate that fact that there is more to a public power than just the wholesale cost of power.

 

2010-08-08_14-16-02-974

City leaders discuss power outages

A substation hums away Thursday afternoon in Washington. (WDN Photo/Jonathan Clayborne) �

By JONATHAN CLAYBORNE
Staff Writer

Published: Sunday, August 8, 2010 2:15 AM EDT

Multiple power outages in downtown Washington, brownouts around town, outages in Bath, dark hours in the middle of the night — Washington Electric Utilities and its customers have been plagued by multiple power failures this summer.
Washington Councilman Bobby Roberson has witnessed the public utility’s problems firsthand.
“Fortunately for me, I’ve worked in other municipalities and, based on my experience living in the 200 block of East Main Street, we have more outages than any place I’ve ever lived where cities own electrical-distribution systems,” Roberson said.
Roberson, mayor pro tempore, acknowledged there have been significant outages this summer.

“It’s not an acceptable level of service, and I think it’s something that we need to work on through the enterprise fund,” he said.
Mayor Archie Jennings said he hasn’t heard an abnormal number of outage-related complaints from his constituents, and he added the city has been quick to respond to power failures.
“When we have an outage, we respond incredibly quickly,” the mayor said. “I think we’re having probably a greater frequency of outages, but because we respond so quickly and the outages are so brief, I think people are understanding of that.”
July brought record-breaking heat, Jennings remarked.
“You’re really taxing the system with the air-conditioning and fans and that sort of thing,” he said.
The question is whether these power failures are abnormal for an electric-utilities system of Washington’s size and service area.
When asked about outage records, City Manager James C. Smith advised a benchmark measure is hard to come by, and he shared the city has tried to achieve apples-to-apples comparisons to other towns, without success.
WEU is somewhat unusual because it serves areas outside the city and spreads over portions of three counties, Smith said.
Some publicly owned electric companies sell power within their corporate limits only, Smith pointed out.
Yet, Smith acknowledges the city could always stand to concentrate more funds on upkeep.
“The system is older than it was, and there hasn’t been a robust investment in it,” he said.
Temperature extremes have caused their share of difficulties in keeping the lights on, he indicated. Cold, icy winters and extremely hot summers stress the aging utility’s infrastructure, he pointed out.
“There’s no doubt that the weather has stressed the system,” Smith said. “That’s a given. It’s an old system in large part, though we’ve renewed pieces of it.”
Smith also addressed questions about whether the system is being maintained adequately, factoring in budgeting.
“It hasn’t been maintained to a level that would guarantee no outages,” he replied, adding, “We certainly could use a higher level of maintenance.”
The city has a plan generated by ElectriCities, a nonprofit support entity serving municipal power agencies across the state.
The plan, while not ideal, prescribes recommended maintenance measures, Smith related.
“We have not been able to fund that,” he said.
Keith Hardt, the city’s electric director, declined to comment when asked whether the utilities-maintenance budget is adequate, suggesting that’s a question for the council.
“I’d rather not comment on whether it’s enough,” Hardt said. “I think that’s a political statement that I don’t need to make.”
Asked whether some of this summer’s outages were attributable to an inadequate maintenance budget, Hardt unequivocally answered, “No.”
“We’ve had some equipment failure,” he commented.
According to Matt Rauschenbach, the city’s chief financial officer, in his most recent budget request, Hardt ask the city council to OK more than $5.2 million for maintenance, including over $2.6 million for power-line construction.
The council approved more than $4 million for maintenance, including in excess of $1.6 million for power-line construction, well short of Hardt’s request.
WEU’s total budget was projected to be over $37.285 million for the current fiscal year, which began July 1.
“We’ve been focusing on the electric company, but we want to run a first-rate electric company and we haven’t made any cuts that I’m aware of that would affect the efficiency of the system,” Jennings stated. “In fact, we’ve invested quite a bit in the system to try to take the stress off of some of our areas.”
Councilman Doug Mercer contends WEU is generating enough profit to adequately maintain the system.
“We are buying electricity and then reselling it with a margin or a markup or a profit … of about $7 million,” Mercer said. “Now, I would be inclined to think if we are properly spending our monies that $7 million ought to be adequate to maintain our systems. My lights have blinked in the last couple of days like everybody else’s, and I have not bothered to call and ask why. I just assume we’re having some difficulties.”
Mercer said he’d been told outages in places outside his neighborhood had lasted for hours, versus the couple of minutes during which he lost power at his home.
The city is spending millions every year to keep the system running, he said.
“If we need more money than that, someone needs to come forth and tell us that,” Mercer stated.
Mercer also referenced an issue that has been politically charged in past city-council elections — transfers of money from the electric fund to the general fund, a practice a majority of the council reportedly wants to bring to a close over time.
The electric-fund transfer in this year’s budget amounted to around $973,000, about $200,000 less than transfers from the fund in the previous fiscal year.
Like Mercer, Roberson contends WEU has a proper amount in its maintenance fund.
As for the outages, “I think it’s a combination of things,” Roberson said. “I would definitely think that the electrical maintenance budget is adequate based on municipalities our size.”
Said Jennings, “I think the idea that we’re just trying to skimp by or we’re just trying to rig the system as cheaply as possible, I don’t think there’s any credence in that. We would be throwing good money after bad if we did that.”

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About George Fisher

George is a freelance writer, an author and a Democratic political consultant. He has worked as Deputy Communications Director for a Senatorial campaign and Campaign Manager for several NC House races and one congressional race. He previously worked as a news producer for a local television station.
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One Response to What Happens When A City Doesn’t Budget Enough For Your Electric Utilities

  1. Pingback: Butterfied: Paying down ElectriCities Debt with Fed Money is Not Possible « The Political Agitator

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