WILLMAR -- Next year will be a "down'' budgetary year for the Willmar Municipal Utilities, if the preliminary 2010 budget is any indication. The Utilities Commission received the preliminary 2010 budget on Monday and will act on the budget at the next meeting Dec. 14.
Combined 2010 revenues from the electric, water and heating divisions are estimated at $26,242,900, down from $26,714,100 in 2009.
Revenue is expected to decrease because the utility is not selling as much as anticipated -- even in the 2009 budget -- and especially in the electric division, explained Larry Heinen, utility customer service supervisor.
The decreased revenue reflects current economic conditions as customers spend less on electricity.
Heating sales -- mainly to customers in the downtown area -- are driven more by the temperature.
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Water sales are pretty constant, said Heinen.
"We are selling less (electricity) than what we budgeted,'' he said.
However, the electricity they are buying is cheaper than what was budgeted.
"What we are buying is cheap and we're not buying as much as we budgeted because we're not selling as much,'' he said.
Electricity "is the lion's share of everything,'' said Heinen. "So, however electricity goes, the combined goes with it.''
Operating revenue from the electric division is the largest source of overall revenue for the utility. Operating revenue is anticipated to decrease from $23,732,400 in 2009 to $23,332,300 in 2010.
Overall operating expenses in the three divisions are also budgeted to decrease from $24,403,800 in 2009 to $23,648,000 in 2010.
Operating expenses in the electric division are budgeted to decline from $21,745,200 in 2009 to $20,969,000 in 2010.
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The biggest "unknown'' factor on the expense side is the cost of purchased power because purchased power costs can go up or down without much notice and are highly dependent on the overall regional demand for that power, said Heinen.
"If things do start bouncing back, then the price is going to go up,'' he said.
The utility generates 15 percent of local electric needs, and buys 85 percent from outside sources. Of that amount, 83 percent is bought under contract, but those prices can be subject to change. The remaining 1 to 2 percent is bought on the open market.
Estimated purchased power costs are budgeted at $11,238,000 in 2010, down from $12,070,700 in 2009, but the utility is estimating those costs could go up a little bit.
The water division budget for 2010 holds the line on maintenance and spending. Operating revenue is estimated to decline from $1,951,100 in 2009 to $1,894,000 in 2010. Operating expenses will be up slightly from $1,727,800 in 2009 to $1,756,400 in 2010.
Water sales are weather-related, said Heinen. If the summer is dry, the utility may sell more water. But if the summer is average, sales should be about the same as 2009, Heinen said.
In the heating division, operating revenue will fall slightly from $1,030,600 in 2009 to $1,016,600 in 2010. Operating expenses will also dip from $930,600 in 2009 to $922,600 in 2010.
After all bills are paid and other income and deductions are figured, the utility makes an annual payment to the city of Willmar, called an intergovernmental transfer, which will make up 8.3 percent of the city's $22 million revenue budget in 2010.
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The intergovernmental transfer in 2010 is budgeted at $1,842,300, up from $1,771,400 in 2009. The payment amount is based on a formula reached under a three-year agreement with the city that expires at the end of 2009.
Any funds remaining after the payment of the intergovernmental transfer are called retained earnings, which are similar to a profit in the private sector, and pay for capital projects. Retained earnings are estimated to decline from $656,000 in 2009 to $627,400 in 2010.
