Despite $1.5M loss on failed Big Stone plan, MUC ends year with nearly $600K in assets
WILLMAR -- The Willmar Municipal Utilities finished 2009 with net assets of almost $600,000 after all revenues and operating expenses and other costs were calculated, according to the annual audit presented Monday to the Municipal Utilities Commission.
The audit, presented by Larry Wepplo of Conway, Deuth and Schmiesing of Willmar, was accepted by the commission. Wepplo said the audit's financial statements represent the operations of the utilities, and he gave the audit report a clean opinion, which he said is the highest opinion an audit report can receive.
"The accounting department is to be complimented for that,'' said Wepplo.
The net asset figure is calculated by adding and subtracting various revenues and expenses.
The utility had operating revenues of $25,310,427 in 2009 compared with operating expenses of $21,559,815, leaving operating income of $3,750,612. In 2008, the utility had operating revenue of $24,442,995 and operating expenses of $22,499,575, leaving $1,943,420 in operating income.
After calculating other income and expenses, including a $1.5 million loss in planning costs for the failed Big Stone II project and the $1.77 million transfer payment to the city, the utility had a bottom line of $597,031
Wepplo said the figure was good even though it was down from $622,127 in 2008. Utility officials had thought the 2009 budget would have ended with a negative balance of $1,855,600.
General Manager Bruce Gomm said the utility managed to have $597,031 remaining in net assets, even though the figure took into account the utility's Big Stone II loss of $1,503,227, which includes slightly more than $1 million already paid and another $500,000 remaining to be paid in 2010 and 2011.
Since the utility had such a good year in 2009, officials decided to "book'' the remaining $500,000 loss in 2009 even though the utility has not yet made those payments. As a result, the utility will not be required to show the loss in the future, Gomm said.
"When you take $1.5 million out your bottom line and you still have almost $600,000 left, that's pretty good,'' he said.
Revenue in the electric and water divisions rose in 2009 due mainly to a 5.35 percent rate increase in 2009, even though sales of kilowatt hours declined 2 percent and water sales went down 4 percent.
Gomm thinks electricity sales declined due to the slowdown in the economy, less air conditioning use because summer weather was cooler, and reduced load and customer efficiency thanks to energy conservation projects.
Because of the sudden decrease in market demand for electricity, the price for energy declined quite a bit, Gomm said. "That really helped us out,'' he said. Even though sales were down, power supply costs were much lower than budgeted.
Water sales were down because the utility's largest customer, Jennie-O Turkey Store, purchased less water in 2009. Gomm said he was pleased with the audit and the year's results. He said the utility was able to stay under budget "pretty much all across the board.'' Because of the power supply issue, the utility ended up with a better bottom line.
"Of course, we're very upset about the whole Big Stone II issue and having to lose an investment we had put in that,'' he said. "My overall feeling is I'm very pleased with the audit and our budget year in general.''
In other business, the commission received a report from Jeff Kimpling, manager of electric services, on the emergency operation contingency plan.
The plan provides a guide for management and personnel in the event of a power outage caused by electrical failures, natural disasters or other hazardous situations.