Positive Feedback on Pre-pay, Fiber to the Home and More Discussed at Hope Water & Light Commission Meeting

The Hope Water & Light Commission held their February meeting on Wednesday, February 26, 2020, beginning with the swearing in of Dr. LaDell Douglas for another term on the Commission. The Commission also voted to re-elect the existing officers to the Board. The officers are: Dr. Lester Sitzes, III, Chair, Dr. LaDell Douglas, Vice-Chair, and Judy Davis, Secretary.

Charlotte Bradley presented the December income statements and financials for electric, water and fiber to the home.

Fiber to the Home
Billing for this project began in December, but expenses weren’t expensed out until February, so the statement is only showing income at this time. Reports will be more in depth as billing progresses and expenses are able to be shown on the statements.

Electric income was down for 2019 by almost 2 million and expenses were down by $1.6 million. The difference in income was approximately $167,000 less in 2019 than it was in 2018. $85,000 in charge offs for 2019 were posted in December, and along with electric distribution and maintenance combined being up about $70,000, caused a drop in income. Bradley stated that there was no increase in payments after the bad debt was posted to the media but collecting the charged off accounts is a continuous process throughout the year due to customers returning to connect utilities and then being required to pay outstanding bills.

Water income was down $250,000, expenses were up $74,000 and total expenses were up by $194,000, bringing the income to a difference of approximately $492,000. The SW AR Water District payment of $27,000 occurs in December. This is for storage of water and it is expensed out each month so the $27,000 is the payment for 2020. Charge off amounts for water in 2019 were $19,000.

Balance Sheet
Bradley stated that the balance sheet is pretty standard. The balance sheet after accruals will be available after March. Commissioner Ramsey asked why the board had to wait until March for these numbers. Bradley responded that the computer system does the financials now, so they have to wait until they receive the pension numbers from APERS for retirement. She stated that this effects retained earnings, which would also affect the January financials. The board asked if the accruals could be done without that information and then adjustments can be made the next month. Bradley stated that they will try doing that for next year’s December financials and make the adjustments in February through a journal entry. Financials for December after accruals, January and February will be presented in March.

Project updates
Charlotte Bradley discussed the new pre-pay program that HWL is offering. She stated that is probably one of the best programs HWL has initiated and they are receiving positive feedback from customers. The program was launched on February 3 and as of Monday, February 24, there were 25 customers on pre-pay. In addition, they are able to help customers that don’t have the large amount of money required for a deposit by allowing them to pre-pay a minimum of $50 for their utilities. Another advantage is that they were able to catch a water leak within a few days because of the prepay program. The customer’s water had been disconnected by the system due to the leak and when the customer came in, they were able to identify the issue and the customer was able to get it repaired. These problems used to take at least 30 days to catch, so the program is saving HWL and the customers in potential bad debt expenses. Bradley stated that since they are catching issues on the front end, people are less likely to leave owing money and since pre-pay funds are the customers money, not a deposit, it is saving on interest rates for HWL.

Bradley also discussed the new kiosk at the entry.  As of February 1 at 5:15, $10,363.28 had been received in payments and they received $8,221.03 in January. The amounts are down a little as compared to the old drop box, but since this is a new process, people are still putting money under the front door. Hope Water & Light has posted a sign stating that HWL is not liable for any cash left under the door.  Commissioner Davis asked if customers that have numerous account numbers and write one check have the ability to put all 3 account numbers in on the kiosk. Bradley responded that she will check the kiosk to see how that needs to be handled. Bradley stated that the kiosk is accommodating for customers to pay afterhours, holidays, and weekends and also when the system disconnects pre pay customers. The customer only has to go to the kiosk, make a payment, and the system will turn them back on.

Salary survey.
Charlotte Bradley stated that she contacted the Chair of the AMPA human resources group and the attorney decided it would be beneficial to the entire group for this to be a real survey. The attorney has contacted each group and developed a format for salary mid-points and benefit packages that each company offers and will distribute to all group members. There will be around 10 municipalities in Arkansas involved and Bradley said staff has personally reached out to other utilities in Malvern, Texarkana, Magnolia, and Central Arkansas Water. She has also reached out to a few investor owned utilities and co-ops, but they would not provide any information. Bradley stated that she is continuing to try to get that information at this time. The attorney plans for this to be completed in March.

Cost of Service
Charlotte Bradley discussed the cost of service project. She stated that they reached out to the rate study group and received several options. Bradley and Russell Cornelius looked over each option and requested option 1, which is to calculate the avoided cost associated with solar installations. They also asked them to develop a solar rate for HWL. Option 2 was an additional $3,000 and option 3 was an additional $2,000. Option 4 was based on hourly fees and not a set cost. Bradley stated that although option 1 has been chosen, no agreement has been signed as of now.

Russell Cornelius and Charlotte Bradley met with AEP SWEPCO employees on solar. Initially, their replies were that HWL would be in violation of their contract if they purchased excess electricity from a customer who was generating electricity using solar panels and would also be in violation of the contract if HWL built any type of generation. They discussed that the wants and needs of customers are the same for each of them and SWEPCO employees agreed to go back and look to see if an amendment to the contract to allow HWL to do a “buy all, sell all” type of tariff could be made. This would allow HWL to sell all electricity, even what is generated on a customer’s solar system at a retail rate, but then credit them with HWL’s avoided costs. This allows the utility to still maintain and recover operating expenses. The tariff that we updated recently said we would purchase power that was put back on HWL once the value got up to $100. They also discussed other companies that had wholesale contracts and were allowed to have a certain amount of renewables. SWEPCO also agreed to look at HWL being allowed to build some solar cells that they can offer to the customers. All of this would require a contract amendment on one of the two options. Cornelius stated that he has requested that SWEPCO send them the information within 90 days. If they are able to do a contract amendment, HWL would have to begin reporting the amount of KWH in the buy all, sell all so that they can report it as well and both companies can recover operating expenses.

Net Metering
Cornelius stated that after avoided costs and tariffs are received, he will get back with Jason Carter to update the net metering tariff and distributed generation policies.

Russell Cornelius stated that there isn’t a lot of new information on the transmission project. He initially thought SWEPCO would come in March to do a presentation, but after talking to the attorney, it looks like it will be April. He stated that they need concrete information before they do the presentation about SWEPCO purchasing the transmission line between the Hope north substation and the Emmet switch.

Cornelius stated that Honeywell is still reviewing the cat results that were sent to them. They are proposing changes be made at the gatekeeper level in regards to settings, turning them on or off, to hopefully improve and reduce number of hops that a meter has to take to get back to a gatekeeper. Right now HWL has meters that make 10 plus hops before they get the information to a gatekeeper and need them to make at most 4-5 hops.

Fiber to the home
Cornelius stated that several people from in and out of HWL service area are requesting fiber service. At this time, HWL is serving 40 customers and 8 more are about to hook up in the pilot area. He stated that there is a customer on Oak Creek Drive, which is very close to the pilot area that would like it in their neighborhood. There are 8 houses on Oak Creek Drive and each homeowner has signed a request for the service. Since this neighborhood is very close to the HWL pilot area, it would only cost $12,800 to include the 8 customers on Oak Creek Drive. The revenue from those customers would be $580 per month and it would take about 24 months to repay the investment. He also discussed another neighborhood with 5 more interested customers located about 1 mile from the pilot area. Cornelius requested that the board allow HWL to provide service to these areas. Commissioner Davis questioned why they should agree to do this when other areas are wanting service as well and they can’t provide that at this time. Cornelius responded that if the customer is outside the pilot area, HWL cannot add them until they have a consistent design for the entire project. A motion was made to provide service to the Oak Creek Drive neighborhood since all homeowners in that area had signed the request for service. The motion was approved 3-2.

The Board discussed the next phase on fiber to the home and what needed to be done to provide this service to everyone. Cornelius stated that they would need to do an RFQ to search for an engineering firm, who would then begin designing the system. A motion was made and approved to begin the process for the RFQ. Commissioner Davis asked about the time frame for this and Cornelius stated that an engineer should be selected within a couple of months and then it would take 3-4 months for a full system design.

Water Treatment Plant Project
Les Patterson discussed the progress of the Water Treatment Plant Project. He presented demolition and construction pictures to the board and stated that everything is working well and they have had good results. Patterson said that as soon as the geotechnical work is completed, the engineer has all of the information and the results are compared with the original design, construction on Clearwater #2 can begin. Estimated time frame for completion of clearwell #2 is mid September.

Russel Cornelius informed the board that the sale of the land to New Millennium is complete. HWL received a check for $74,070.58, which was for the agreed upon amount of $5,000 per acre for 14.58 acres and $2,500 per acre for .953 acres, which is where the Entergy easement is located.

The Hope Water & Light Commission will hold their next meeting on March 18, 2020 at 7:30 a.m.

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