DL braces for higher energy costs
Higher energy costs are hitting the Detroit Lakes area.
The city's electrical utility is budgeting $7.8 million to buy power next year, up from $6.9 million this year.
In 2004 the utility paid $6.1 million for power.
A drought in North Dakota is partially to blame. The utility gets about 40 percent of its power from federal hydroelectric plants on the Missouri River. But low water levels are crimping energy output, forcing energy providers to turn to other, more expensive, sources.
High railroad shipping rates for "captive market" coal trains from coal fields to power plants are also to blame, as are higher prices for natural gas, burned in a growing number of power plants.
The Detroit Lakes utility remains fiscally healthy because it raised rates this year and next year, which will increase revenues to an estimated $11.2 million next year from $9.8 million this year.
All in all, the electrical utility will come out about $705,000 in the black next year, up from about $550,000 this year.
And the utility will still contribute $475,000 to the city's general fund, as it has for the past several years, helping to keep property taxes down.
The utility will also transfer more than $72,000 to the city for street lights.
And it will pay about $33,000 toward the city attorney's budget, or about a quarter of the total cost, even though the utilities department has few legal costs.
The utilities department even came up with a $10,000 donation towards the bronze sailboat statue planned for the waterfront -- though some members of the commission would rather see the statue placed at the city entryway on Highway 10 West.
The cash balance for the electrical utility fund is estimated at $5.3 million at the end of 2007, up from $5 million estimated for the end of this year.
The large cash reserve helps keep the utility's bond rating sterling, according to city finance officer Lou Guzik. That's why the utility will bond $2.3 million next year for a new warehouse complex.
Land acquisition is under way, with four sites under consideration, including one in the city's north industrial park on Richwood Road. The other three are all within city limits, said Utilities Superintendent Curt Punt.
The new warehouse will allow the department to consolidate equipment from three buildings and storage yards, including the main storage area in the industrial park near the Pelican River that sometimes floods, limiting what can be stored in the yard there, Punt said.
Thanks to higher water rates, the water utility fund will see net income more than double next year, to $92,100 from $42,400.
Higher residential water fees will bring in an additional $50,000, and higher commercial fees will bring in another $40,000, for total metered sales estimated at $800,000 -- up from $704,000 this year.
Acquisition of fixed assets has been high in the recent past -- the department spent almost $900,000 in 2005, with another $614,000 estimated for this year -- much of that spent on the Long Lake annexation project.
But spending in that category will drop to just $15,000 next year, leaving the water utility fund with a nice $700,000 cash balance at the end of 2007, up from an estimated $424,000 for the end of this year.
The Wastewater Treatment Fund will see net income of almost $38,000 next year, after losses ranging from $133,000 to $258,000 the past three years.
Again, it's the acquisition of fixed assets that makes the difference -- with the department budgeting just $37,000 for that next year after spending $344,000 this year, $443,000 last year and $537,000 two years ago.
A good chunk of that amount, at least during the last two years, was used to expand lift stations, force mains and other infrastructure to the newly-annexed Long Lake area.
Cash balance in the wastewater treatment fund is estimated at just over $2 million at the end of next year, up from $1.8 million estimated at the end of this year.