Electricity fund getting amped upPublished 10:34am Friday, November 8, 2013
CAIN MADDEN/MANAGING EDITOR
FRANKLIN—Whether a truck crashes into a pole or a storm comes through town and takes out the power, or even when a raccoon chews through a line, the money to fix the damage caused by man and nature to the infrastructure has to come from somewhere.
In Franklin, that’s where electric fund reserve comes in. It is supposed to be set at 10 percent of electric operations, and today it stands at approximately 6 percent of operations or around $800,000. That’s a long way from where they want to go, said City Manager Randy Martin, but it is a marked improvement from slightly more than $365,000, which is where it fell at its low point of June 2012.
“We’re still under our minimum by about $500,000, but over the last 15 months, we have increased it by $500,000,” Martin said. “We’re not there yet, but that’s significant progress. If we sustain this growth, we hope to be back to where we want to be in 12 to 18 months.”
Two years ago, had a significant event happened that damaged the infrastructure, the $365,000 would not have covered a lot, he said.
“Substations are expensive to repair and get back online,” said Martin. “It is important to get power back on in a timely manner to keep up our good record of restoring power after events.
“It is important to keep this fund at the minimum because the electric department is more vulnerable than anywhere else when it comes to unexpected expenses.”
Martin said this is a department that has to be operated like a business as much as possible.
“When we buy new equipment, if we do it from reserves rather than borrowing, it comes at a lower cost to our customers,” he said.
The city got in this situation because of how it set its rates. When the wholesale purchased rates from Dominion were increased, the city did not increase its rates accordingly, rather choosing to subsidize the payments for energy to keep customer bills low during that time.
It got back on track by balancing the cost of wholesale power with the pricing billed to the customers. It also built in a 2 percent cushion to help replenish the fund. Martin added that having this pad can help save customers money in the long run.
“We also made sure that our budget was lean by cutting costs and reducing some costs — that contributed,” he said. “But the key is making sure that our billing rates are balanced and reflect the cost of wholesale power.”