The next millennium isn’t starting out cheaply for Austin Utilities if Tuesday’s Board of Commissioners’ meeting is anything to go by.

Thursday, November 11, 1999

The next millennium isn’t starting out cheaply for Austin Utilities if Tuesday’s Board of Commissioners’ meeting is anything to go by.

At the meeting, the board approved a capital improvements budget for 2000 that is 40 percent higher than this year’s and an operating budget that may leave the utility with less than it will start the year with – more than $2.2 million less.

That’s unusual, but financial manager Walt Stevens said part of the reason for the difference is speculative right now. If the Mower County Board of Commissioners decides to take advantage of the utility’s new shared savings program to install geothermal heating and cooling in the proposed multipurpose arena, that – along with other similar projects – will cost Austin Utilities $1.2 million up front. That money will, however, be repaid. If the county decides not to install geothermal, or chooses another financing alternative, it leaves the utilities $1.2 million in the bank.

Board president Ken Regner pointed out the reasons behind the shared savings program were a combination of practicality and altruism.

"We’re doing this mostly to be good citizens and in the interest of energy efficiency," Regner said.

The increased capital improvements budget is another reason for the projected deficit.

Normally, the municipal utility averages approximately $2 million in capital improvements each year, but Stevens told the board to expect the figure to be closer to $2.8 million for the next two years.

"The renovation of the central substation is the main reason for the larger expenditure," Stevens said, "even though we’ve spread the project over a two year period."

Other out-of-the-ordinary line items that will be included in next year’s capital improvements budget included $350,000 to reline the downtown plant’s water tank inside and out and close to $250,000 toward software replacement for billing and other programs.

"We’ve always striven to be cash-neutral on the budget, but this budget won’t do that if we enter these type of programs," Stevens said, referring to the shared savings program. He did point out, however, that Austin Utilities would make the money back – at 10 percent interest – over time.

Also of note, Stevens said, was the effect the storm in June of 1998. Because of the resulting reduction of power consumption – Austin didn’t have electricity when SMMPA was experiencing its peak – prices were lower in 1999. However, Stevens predicts Austin Utilities will pay 8 percent more to purchase electricity ($1.27 million) in 2000 than it did in 1999.

"The storm gave us a one year reprieve," Stevens said, "but costs are going back up. In retrospect, maybe we shouldn’t have had a rate cut."

Regner, in return, pointed out that the utility would have to look at costs, not just rate increases.

"There are a lot of cost components here," Regner said. "All this stuff put together gets us to the bottom line."