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Favorable Audit for MWL

posted Jun 26, 2014, 11:52 AM by Staff News & Citizen
     by Mickey Smith

     Morristown: An independent audit, contracted to look at potential ways to streamline operations and save the ratepayers money, has reported Morrisville Water & Light  (MWL) has the lowest electric rates of neighboring power plants and only Stowe provides lower water/sewer rates. Those rates fall mid-pack for the state overall.
     The report, which was prepared in 2013 by Whitfield Russell Associates (WRA), examined the possibilities of retaining the status quo at the plant, selling the municipal system or portions thereof and outsourcing certain services (like the operation of the sewer plant which is currently run by an independent contractor).  It also looked at ways MWL could better utilized its hydro assets. WRA provides reports of this nature to municipal utilities for the purpose of creating business plans involving the future of municipal utilities.
     “We are pleased with the comprehensive independent business review and report completed by Whitfield Russell Associates,” said Ed Debor, chair of the Morrisville Village Trustees, the board that serves as directors for MWL.  “The report provides critical guidance on a number of key issues facing Water & Light.”
     “MWL should continue operating as a municipal power system, either independently or in combination with other municipal power systems. MWL offers power at very competitive rates to its residential customers, can finance expansions and improvements at tax-exempt interest rates, and has a century-long record of prudent management under local control,” stated the report in its conclusions.
     It went on to state some of the advantages of municipal owned power, including: local control, cost sharing benefits and the utility to be unlikely to yield a high price on the market because of a lack of commercial and industrial customers.
     Because the plant’s rates are at or near the lowest around the area, the report does not feel a merger with another utility would be advantageous because Morristown already has the lowest utility rates.  The report does mention a merger with Stowe's wastewater facility would be the only option that could see a reduction in cost, since those rates are lower.
     “Merging with or selling its water/sewer departments to any of the other neighboring utilities would not lower rates to MWL’s customers at this time, unless combined staff could be reduced and rates lowered for all participants. All of MWL’s utility departments achieve cost-sharing benefits as a result of sharing general utility employees, as well as customer account, billing and payroll efficiencies, which could be lost in any merger or sale,” states the report.
     Based on 2011 figures, Morristown residents paid $0.1552 per kilowatt hour. Sixth best out of the 19 utilities in the state. The next best in Lamoille County was Johnson Electric at $.1746.
     The report discussed ongoing efforts to create a pool of line workers with other utilities.
     “Pooling resources with other utilities could allow MWL’s more experienced line workers to train others, perform work as needed, and MWL could share savings with all participating utilities. Furthermore, as various employees retire or leave, economies could be achieved by reducing the number of line workers needed by the participating utilities,” states the report.
     The report also suggests MWL look into not replacing a recent retiree.
     “MWL will need to analyze whether four line workers are sufficient, which WRA believes should be the optimal number for MWL as a stand-alone operation, states the report.
     One suggestion that could lead to cost savings would be to review the outsourcing arrangement with Utility Partners LLC, the Georgia-based company contracted to run the wastewater treatment facility, and to put the contract out to competitive bid.  The report suggested the only way it would be cost effective to go back to running the sewer plant in house would be if they could absorb the two positions necessary to run the facility with the existing staff.
     “If MWL must hire two new employees in order to return to in-house operation of the wastewater treatment facility, any savings would probably disappear. The record of the present contract provider has been acceptable, and MWL avoids the risk of violations by maintaining the current contract provider,” states the report.
     MWL's combined quarterly sewer and water rate (based on 6300 gallons per month usage) was $334.01 about $7.50 more than Stowe's numbers for the same usage, this is 8th out of 13 wastewater treatment facilities.
     To view the complete report, visit MWL's website at www.mwlvt.com, and click the section marked “Business Plan.”
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