ROGERS — The financial situation for Rogers Water Utilities is showing no improvement six months into a new fiscal year which includes revenue from a rate increase enacted in March.
Unseasonably wet weather and a slow economy is blamed for a downturn in revenue which resulted in cuts in staff and expenses.
A commission manages the utility as an entity separate from the city. The utility does not receive money from city coffers although the city council must approve rate increases.
“The wet weather the past two years has reduced the amount of water we sell,” said Commissioner Guy Cable. “Selling water is how we pay the bills and there is very little we can do about the weather.”
After more than five years of robust commercial growth, commercial construction and consumption slowed to a trickle, also impacting revenue, Cable said.
To combat diminished water sales, the commission asked the city council for a 9 percent rate increase in March. The council gave the utility a 6 percent increase which was effective in October. However, revenue from the rate increase was not included in the 2009-10 budget.
“That has helped us be in not quite as bad a position as our budget would have indicated,” said Joyce Johnson, water utility controller.
Cable said the only other financial alternative available to the commission was to reduce expenditures, a step the commission took when it prepared the 2009-10 budget. The commission operates on a June through May fiscal year.
Seven water utility employees were terminated in the past six months and seven other positions were left open through attrition. Even with 14 fewer employees, the utility is still having to use reserve money to balance the budget, said Johnson.
Johnson said Tuesday she is about two weeks away from compiling a comprehensive analysis of the first six months of the 2010 budget.
“I do know water consumption is behind this year compared to last year,” Johnson said.
The commission, anticipating a construction slowdown, did not include any access or impact revenue fees into the budget.
“We have collected $197,000 in access and impact fees in the water department and $380,000 in the sewer department. That helps us financially,” Johnson said.
The utility had to pull $25,000 from reserve in November to meet expenses even with the rate increase and the additional money from access and impact fees.
A possible capital expense problem looms on the utility’s horizon: the status of concrete sewer lines installed in the 1960s.
One such line failed recently and another line on Poplar Street is being replaced because it was in danger of failing.
Utility engineers say there are miles of the concrete pipes in the city that may be in danger of failure.
“Capital expenditures like that have an impact on our reserves,” Johnson said.
Reserve money has dropped between $800,000 and $900,000 this year, leaving a water department reserve of $12 million and sewer department reserve of $13 million, Johnson said.
Cable said engineers are identifying the lines that could be failing.
“Then the engineers will estimate the cost it would take to fix those lines. It’s going to take some time just to identify how severe the problem may be. We want to be proactive on this rather than reactive,” Cable said.
The cost of waiting until lines fail could be more expensive than correcting the problem before the lines fail, he added.
Tom McAlister, utility manger, said there three things that could get the utility back in the black.
“A drought, a turnaround in the economy or a rate increase would get us back on an even keel,” McAlister said. “It’s bound to turn around sometime, hopefully it will be in 2010.”
BY THE NUMBERS
Rogers Water Utilities
Water treatment plant capacity: 80 million gallons per day
Water system transmission capacity: 28 million gallons per day
Water system storage: 12.5 million gallons
Average daily consumption: 8.5 million gallons
Number of water customers: 26,000
Number of sewer customers: 18,800
Annual operating budget: $16.8 million (fiscal 2010)
Source: Rogers Water Utility