Council reviews WEU’s proposed budget

Published 5:45 am Thursday, June 7, 2007

By Staff
Wants to avoid shortfall woes of FY 2006-2007
Contributing Editor
Washington’s City Council and Mayor Judy Meier Jennette are taking a closer look at Washington Electric Utilities’ proposed budget in an effort to ensure there’s no shortfall between revenues and expenses in the next fiscal year.
The council spent part of its budget session Monday going over WEU’s proposed budget with WEU Director Keith Hardt. There are no planned city-initiated electric rate increases at this time, according to a city budget document.
Last fall, the council learned about a projected $1.6 million shortfall between wholesale power purchased by Washington and revenue from retail power sales for the remainder of the current fiscal year, which ends July 1. The city increased electric rates in an effort to avoid that shortfall.
In April, City Manager James C. Smith told the council and mayor that shortfall had been reduced to $400,000. It’s possible by the end of this fiscal year that shortfall may be eliminated, Smith said at that time.
During their discussion Monday, city officials indicated they believe part of the problem leading to the shortfall centered on faulty revenue estimates for several fiscal years.
The city needs to be more conservative with its revenue estimates involving WEU, Smith said.
Hardt, in his budget abstract, said WEU’s operating expenditures are expected to remain relatively constant during the next fiscal year.
Last fall, Hardt and Smith attributed some of the problems that resulted in the shortfall to using reserve funds to cover deficits between power costs and revenues from power sales and cash-flow problems related to extending the due date for electric bills from 10 days after a meter is read to 15 days. The shortfall was also partially caused some customers not paying their bills and the city not charging enough for electricity in previous years, they said.
Doug Mercer, a former council member, told the council last fall it’s obvious that projections used to help formulate the WEU budget were flawed, adding, “someone really screwed up at budget time.” Mercer voiced similar remarks at Monday’s budget session.
Mercer contends WEU is using an inaccurate number when it projects how much revenue it will not collect from customers who don’t pay their electric bills, which results in an estimate of uncollectable revenue that’s lower than it should be. Hardt contends WEU is using the appropriate number and that it’s Mercer who is using a different and incorrect number in his calculations to determine how much revenue is lost because of “bad debt.”