PWC Financial Audits Shows Utility in Good Financial Standing

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November 12 , 2003

The Fayetteville Public Works Commission (PWC) reported Wednesday its 2002-03 fiscal year audit showing the utility to be in good financial standing despite record-high power supply costs last year.

In a report presented to the PWC Board by PWC staff and Eddie Burke, CPA with Cherry, Bekaert, and Holland, LLP, who audited PWC's financial statements, the utility's power supply costs were a record high $105.2 million, increasing 17.4 percent from $89.5 million last year. The utility's other operating expenses also increased from $66.4 million in 2002 to $69.4 million in 2003. The increase in other operating expenses is attributed to many factors including an increase in benefit costs and insurance premiums.

Steve Blanchard, PWC General Manager, stated that the PWC Board had made the choice to absorb an additional $11 million from record-high power supply costs rather than to recover the expenses through rate increases. Blanchard indicated the 2004 fiscal year would be a recovery year for the utility and PWC would benefit from the new power supply contract with Progress Energy that went into affect in July 2003. However, he indicated that water revenues for the year have already seen a decline because of the wet conditions of the summer.

PWC's FY2003 revenues increased by 2.8 percent from $183.5 million in 2002 to $188.6 million. The increase was attributed to a 4.3 percent increase in electric kWh sales and a 1.5 percent increase in the PWC electric customer base.

Both the PWC water and wastewater customer base increased 4.3 percent and 3.9 percent respectively during the year, however, water and wastewater sales decreased 6.9 percent and 1.8 percent respectively following the 2002 drought and an unusually wet summer in 2003.

PWC's 2003 transfer to the City of Fayetteville from its electric revenues was $9.2 million, representing a $.145 equivalent tax rate. The $9.2 million includes $6.7 transferred from electric sales, $1.4 million spent on street light services and $700,000 annexation debt services.

PWC provides services to nearly 70,000 electric customers, 65,000 water customers and 55,000 wastewater customers throughout the Fayetteville and Cumberland County area.

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