City Utilities of Springfield last night introduced a preliminary draft of its 2013 operating budget during a public hearing and joint study session with the Board of Public Utilities and City Council members.
The budget, which begins Oct. 1, projects operating revenues of $420.67 million against operating expenses of $375.46 million, according to the proposed income statement. Considering other expenses, such as interest expense, the board projects fiscal 2013 net income of $23 million.
CU finished 2011 with net income of $17.29 million and is projected to close 2012 with net income of $7 million.
The 77-page report said based on modest customer growth due to a sluggish local housing market, board members advise reducing CU’s labor count by 25 positions, which would result in the lowest head count since 2000. With the reductions, expenditure projections are $30 million lower than was estimated for 2013 in the 2012 operating plan.
Fiscal 2013 proposed operating budget notes:
- Total receipts are projected at $481.9 million, an increase of $26.8 million compared to the 2012 revised budget.
- Total expenditures are projected at $495.6 million, an increase of nearly $3 million from the 2012 revised budget.
- The natural gas segment has lost customers since 2010, but officials expect the declines to level off next year.
- A three year, $9.5 million environmental regulatory compliance project is scheduled to begin in preparation for compliance with the Mercury and Air Toxics Standards Rule.
- The average daily cash requirement is projected to be $880,000 to purchase fuels and materials, and to fund capital investments, employee expenses and debt service payments; based on benchmarking for public utilities, CU management recommends a target of 75 days cash on hand with a minimum acceptable level of 60 days.
- With natural gas prices hitting 10-year lows, revenue forecasts for electric off-system sales and natural gas were reduced significantly compared to last year’s projections.
The CU board is expected to vote on the budget Aug. 24 and seek City Council approval Sept. 10.[[In-content Ad]]
