SUD Reviews 2014 Budget

by Leslie Lytle, Messenger Staff Writer

At the Nov. 19 meeting of the Board of Commissioners of the Sewanee Utility District of Franklin and Marion Counties, the board reviewed the 2014 budget. The utility hopes to complete the automated meter reading (AMR) installation without taking out a loan.

AMR will enable SUD to retrieve customer meter data via a radio transmitter system. By replacing aging meters which are typically inaccurate, SUD projects a revenue increase. SUD Manager Ben Beavers budgeted a 2 percent increase in water and sewer sales and said the added revenue could be as high as 8 percent. 

The cost of implementing the AMR technology will be spread over two years, $250,000 in 2013 and $100,000 projected for 2014. Beavers said SUD has sufficient cash reserves to implement AMR without taking out a loan, although cash reserves will drop to $850,000. Beavers projects it will take four to five years to build the cash reserve back to its present level of $1.4 million. The revenue increase will come from more accurate metering data and a 3 percent rate increase beginning in 2015. No rate increase is budgeted for 2014.

Beavers said SUD’s consulting firm, Raftelis Financial Inc., recommends the cash reserve should not drop below 25 percent of the operating budget, projected at $1.03 million for 2014. The commissioners questioned whether cash reserves should equal 100 percent of the operating budget. Beavers will seek the advice of the state comptroller and report at the Dec. 17 commissioners’ meeting.

The AMR system will be the first capital improvement accomplished without a loan. SUD is also undertaking repair to the sewer system and, likewise, plans to accomplish this project without borrowing money. Taking out a loan to implement AMR would cost the utility $25,000–$30,000.

In 2006, when SUD went to self-operation, ending its contract with the management firm Severn Trent, it had no cash reserve. SUD has built the cash reserve over the past seven years with careful management practices.

Beavers reviewed other budget highlights. He anticipates revenue will remain relatively flat, increasing from $1.3 million in 2013 to $1.37 million in 2014. Operating expenses will increase from $1.02 million in 2013 to $1.03 million in 2014. Beavers attributed 17 percent of the increase to rising health care costs. For SUD’s employee health insurance plan to qualify, it was necessary to add visual and dental care for children to the plan.

SUD budgeted $261,000 for debt expense in 2014 (the new water plant loan) and $420,000 for capital improvements, nearly half for AMR and sewer repair.

The board will vote on the budget at its December meeting after reviewing the comptroller’s recommendation on cash reserves.

In other business, Beavers reported that the $2,200 repair to the water tank was $1,200 less than expected.

Two SUD commissioners will be elected in January to fill the at-large seats for District B and District C. The SUD commissioners currently holding these seats, Randall Henley and Karen Singer, will seek re-election. 

All SUD customers are eligible to seek election to the board. Potential candidates must present a nominating petition with the signature of ten SUD customers by Dec. 12. Nominating petitions are available 8 a.m. to 4 p.m. weekdays, at the SUD business office.