City Utilities reviewing 1999 budget proposal

by Karen E. Culp

SBJ Staff

City Utilities has begun reviewing its 1999 budget, a budget that is 7.2 percent smaller than last year's budget. The proposed 1999 budget is $21.5 million smaller than last year's and has a total appropriation of $276.3 million.

The lower cost this year is attributable to the fact that the budget does not contain some one-time items that the 1998 budget contained, said Cliff Groover, senior finance manager. The utility has also entered into a number of cost-control efforts, one of which is a two-year cap on wages and benefits that was approved by the board last year, Groover said.

After a series of study sessions by the Board of Public Utilities and the City Council, which began Aug. 7, the proposed budget will go to council for a first reading Sept. 8 and is to be adopted by City Council Sept. 28.

The utility has among its major budget-item projects for this year a city-county trunked radio system. The 1999 budget contains an appropriation of $8 million to begin developing the system, said Bill Burks, executive senior manager of the electric system.

The total project cost is expected to be $15 million, and that includes the infrastructure of the system, not the individual units each user will have to install for itself. City Utilities will be developing the infrastructure, and will be reimbursed by the city and county for their portions of the system, Burks said.

In 1998's budget, there was a $5.5 million allocation for updating CU's own radio system, but that money was shifted into this year's budget for telecommunications in order to develop the joint-user system, Burks said.

Of the utility telecommunications budget, about $1 million is appropriated in the proposed budget for "telecommunications business," Burks said.

"That is money that will be used strictly if there is demand out there for access to our fiber-optic system and the telecommunications services we can provide," Burks said.

House Bill 620, passed during the 1997 legislative session, limited the municipally owned utility's participation in the telecommunications business. The utility now has interconnect agreements with businesses that fall into the areas it can serve under HB 620, such as health care and education.

The utility now has interconnect agreements with St. John's Health System and with Boys' and Girls' Town, Burks said, and is working on an agreement with Southwest Missouri State University. CU also has agreements with Drury College and Ozarks Technical Community College.

A major budget item on the electric side of the budget is a half million dollars allocated for aesthetic improvements, in particular, undergrounding of the utility's overhead wires, in order to improve the appearance of the cityscape, Burks said.

Touted by Councilwoman Teri Hacker at a recent joint Board of Public Utilities-City Council meeting as a priority of hers, the aesthetic improvements will be made on an ongoing basis as money is available, Burks said.

"It is very expensive for us to do that, but we have made this commitment to doing it," Burks said.

Another big expense for the electric portion of the budget is relocating utilities as road improvements are made, Burks said. The utility has allocated $1.5 million for moving utilities as intersections are improved as a result of the quarter-cent and eighth-cent tax projects. The utility does not receive funding from those taxes for the work it has to do as those intersections are improved, Burks said. The gas department, which has a good deal of infrastructure along Campbell Avenue, had to expend nearly $1.5 million to move its gas lines during this year's improvements of the Campbell and Sunshine, and Campbell and Battlefield intersections, said Mike Murnan, manager of the gas systems.

CU also plans to add about 1,400 electric customers to the system in 1999, which is part of the normal growth the utility has been experiencing during the past few years, Burks said.

Though a large part of the entire budget has to do with the potential of electric industry restructuring in Missouri, Kenneth McClure, executive senior manager for customer relations and marketing, said the budget contains two provisions for funds that will be used if the Missouri legislature acts and deregulation of the electric industry becomes imminent. A $50,000 allocation is included for completion of a study on unbundling costs in the electric portion of CU's business.

"We're going to have to know what all of our costs are when deregulation comes about," McClure said.

The budget also contains $100,000 for a study related to how industry restructuring will affect CU. A $20,000 allocation for a "green power" study and how the utility could provide it is included because "there will be some green element to restructuring. We think there will be a requirement to have that available," McClure said.

The total revenue for the year 1999 is predicted to be $261 million, while the expenditures will be $276 million. Groover said money the board has saved will account for the $15 million excess in expenditures. The utility again says it will not raise base rates for electric, gas or water, Groover said.

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