When the economic downturn began in 2007, many companies began decreasing operating budgets and manpower to offset revenue loss. When this occurred, Dalton Utilities, while experiencing the same loss in revenues, already had a very lean budget and staff to operate its SIX business sectors – electric, natural gas, water, wastewater, stormwater and OptiLink. Because Dalton Utilities’ controls only a small portion of utility service costs, it is even more important to keep our overhead as low as possible.
“The cost of utility service is driven much more by issues outside and beyond the control of your local utility,” said Lori McDaniel, Utility spokesperson. “Dalton Utilities strives to be as efficient and cost-effective as possible. A perfect example of this is that out of the 8.15¢ per kilowatt hour (kWh) our residential electric customers pay, less than ONE HALF of ONE CENT comes from Dalton Utilities’ internal operations and functions.”
Dalton Utilities operates with a much smaller and more efficient staff than any other utility our size. Over the past 10 years, we have expanded water service throughout Whitfield County which increased our number of water customers by over 20% and, of course, greatly increased the amount of underground water pipes and mains that we must operate and maintain. Additionally, we added two new business sectors – stormwater management and telecommunications/OptiLink. OptiLink alone added approximately 12,000 new customers and a widespread fiber optic network to maintain.
During that same 10-year period, we actually DECREASED our workforce by 10% through attrition (retirements, resignations and terminations) and by filling only those positions that are absolutely critical. How? As we applied the same technology we sell to our customers to our own operations, we were able to achieve a much higher level of efficiency – in spite of adding thousands of additional customers, bills, meters and countless miles of water and fiber infrastructure!
However, over the past two years, we have put even stricter budget controls in place that would still allow us to continue to offer the same level of service at affordable rates. We have added no new positions and given no pay raises. We have reduced our expenses through deferring $39 million in capital projects – scheduling only those replacement/maintenance projects that are absolutely necessary to ensure a continuity of service and public safety.
Unfortunately, all of these situations have occurred during a Utility “perfect storm.” By that we mean, they occurred at a time when the Utility had subsidized utility rates to customers from its investment portfolio to the point that it is depleted as to require replenishment and necessitating the end of subsidized rates to customers. At the same time, local unemployment is high and overall consumption of utility services is decreased, reducing the top tier of revenue for the Utility. However, regulatory pressures continue to put more and more stress on utility functions. The Georgia Multipollutant Rule that went into effect on January 1, 2009 has increased the cost of our owned generation 12% in 2009 and an additional 9% thus far in 2010. This is a 21% increase in generating costs alone during a time of decreased sales.
An example of these regulatory pressures is our own Plant Scherer. We own a small percentage of this plant, located in Juliette, Georgia. When the plant was constructed in the late 1970s, it cost $2.45 billion. The equipment that is being added to meet the new Georgia Multipollutant Rule will cost $2.8 billion to put in place. Worse yet, this equipment will consume 135 megawatts (MW) of electricity to operate ( this is HALF of the electricity Dalton Utilities’ customers use at peak load) which decreases the amount of electricity available to be used by consumers.
The same type of regulatory pressure applies to the Utility’s water, wastewater and stormwater services driven by drought, watershed protection issues and increasing water treatment requirements. Over the past three years, the Utility has completely overhauled our Mill Creek water treatment plant to allow it to meet new federal Disinfection Byproduct Rules. Soon, the Utility will need to overhaul the filtration system in our largest water treatment plant, located along the Conasauga River, to meet these same rules. Watershed protection issues that impact the quality of our drinking water have emphasized the need for effective stormwater management. These increased stormwater management requirements (mandated by the federal government) are driving additional expenses to repair and expand existing stormwater collection and treatment infrastructure to meet the needs of our growing community.
As you can see, the lion’s share of your utility costs are driven by outside influences. Dalton Utilities is currently in the middle of our 2011 budgeting process and will continue to cut as many expenses as possible and research creative ways to control costs to keep our rates as affordable as possible. As you can see from the attached chart, Dalton Utilities’ residential electrical rates are 47% lower than the national average, 26% lower than the Georgia state average and 10-26% lower than other local electrical providers. Although keeping our rates affordable is very important to us, our budgeting efforts are driven by our greatest responsibility to our customers and the community – to ensure that we provide continuous, safe and reliable utility services.