Don Cope: Increases come at a very difficult time

In this article, the fifth in a series, I thought it might be timely to reiterate some of the points made about our operations in previous articles given that October is when Dalton Utilities presents its proposed budget for the next year to the Board of Water, Light and Sinking Fund Commissioners for their review. All of the operational issues discussed in the four previous articles directly impact both the revenue and expense columns in that proposed budget.

In previous articles, we discussed that the utility is working to become debt free by the first of 2012, and how, over the last 10 years, Dalton Utilities has provided $120 million in the form of sales tax, transfer payments or franchise fees to support local government functions. This money has been utilized by local government to fund programs and projects … without raising your property taxes. In fact, Dalton Utilities has never received any tax revenues. Our operations are funded entirely by you, the ratepayers.

Next, we addressed the various sources from which we acquire our electrical energy and how Dalton Utilities provides the transmission and distribution services necessary to bring that energy to you, the end use customer. This was followed by an article that cited how energy legislation has the potential to strongly impact our operations. We referenced the article, “Barbour — Energy Cost Could Cripple Southern Economy” in which comments were made by the governor of Mississippi at the Southern Growth Policy Board regarding how the many energy-related issues being discussed and proposed as legislation could as much as triple your current electric bill. We then addressed our three-pronged approach to watershed management and how water, wastewater and stormwater management issues are intertwined and must be approached in a unified manner.

Fast forward to October 2009. Dalton Utilities continues to serve as a cornerstone of our community’s economic vitality and quality of life by providing the utility services which have become essential for all aspects of life. We recognize that you, the consumer, have little choice regarding your utility service provider. That is why we work so hard to manage our operations in the most efficient and cost-effective manner possible, so that our customers benefit from the direct result of efficient management … lower prices for our services.

We are keenly aware of the circumstances faced by all in this community during this deep and long economic downturn. However, we must also deal with the reality of funding the operation of our business. In the last year alone, the amount Dalton Utilities paid to purchase electricity has increased by nearly 15 percent. At the same time, we have fixed costs in the form of electrical generating plants, electric transmission, water and wastewater treatment plants and miles of water, gas and sewer pipelines which have ongoing costs to maintain and operate.

The cost associated with the Georgia Multi-pollutant Rule (air quality controls on coal-fired power plants) to Dalton Utilities will likely exceed $8 million by year end. Additionally, we have been forced through state drought management policies to reduce our water consumption and have not been allowed to utilize the resources we paid for to address drought contingency, thereby placing an even greater economic burden on our water and wastewater operations.

Additionally, the cost for television content from our providers (such as ESPN, Disney and all local network affiliates) has increased by over $600,000 from 2009 to 2010. When our sales revenue decreases (as it has during this economic downturn), our costs do not decrease in a one-to-one ratio to offset that loss. The utility’s assets and contracts are long-term and do not lend themselves to elimination or reduction.

Looking to the future, Dalton Utilities is actively recruiting new customers to grow our volume of service and increase our economic efficiency. Additionally, we are attempting to move towards a more regional approach to providing services which, in concert with acquiring more high-usage customers, will allow us to manage our costs and keep our customers’ rates lower than other providers who do not benefit from a concentration of high-usage customers.

In this year’s budget, we have proposed a 9 percent increase in electric rates, a 16 percent water increase, a 13 percent wastewater increase and a small increase in selected telecommunication services. We recognize that these increases come at a very difficult time. However, we encourage you to compare Dalton Utilities’ rates to all of the other utility service providers in the area, and you will find that our rates remain the lowest in the region. State and national electric surveys show that Dalton Utilities’ electrical rates are 60 percent lower than the state average, 47 percent lower than North Georgia Electric Membership Corporation’s (a TVA distributor), and 37 percent lower than Georgia Power’s.

The following Web sites will give you comparisons to national, regional and state utility service providers’ costs:

• www.jea.com/services/electric/rates_quarterly.asp

• www.psc.state.ga.us/electric/surveys/residentialrs.asp

• www.eia.doe.gov/cneaf/electricity/epm/table5_3.html

I invite you to review them and compare where your utility service provider stands.

Additionally, comments have been made regarding other providers’ recent rate reductions. I invite any of you to compare on an actual consumption basis a bill for Dalton Utilities services with that of any other service provider. It is safe to say that, even with our proposed rate increases, Dalton Utilities’ customers will save hundreds of dollars during the course of 2010, as compared to other area service providers.

Albert Einstein once said, “What’s right is not always popular, and what is popular is not always right.” We certainly don’t expect to be popular when we increase rates. But we sincerely believe it is the right thing to do to ensure the current and future health and vitality of both Dalton Utilities and the communities we serve.

Don Cope is president and CEO of Dalton Utilities.

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