Minutes 11/28/1988 - Laserfiche WebLink

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MONDAY, NOVEMBER 28, 1988 FY87/88, determined by'reducing audited.expenditures as shown 'on the attachment to Mr. Fitts' memo of October 31, 1988 by the $1,808.895 transferred tothe General Fund, and subtracting the result from the audited revenues also shown thereon, was $1,I43~091 or 11.5% of revenues, whereas APCO's Operating Income for the year ended December 51, 1987 was 18.9% of its operating revenues~ (See Appalachian Power' Company 1987 Annual Report. p.9). Had the Electric Fund's Net Income been comparable as a percentage of revenues APCO's in FY87/88, $1,902,988 would have been available as Net Profit for transfer to the General Fund. Similarly, $1~998,770 would be available for transfer. in FY88/89 and $2,080,732 would be available for transfer in FY89/90. It would appear to us that, given this significant difference in operating income as a percentage of revenue between the Electric Fund and APCO, strenuous efforts should be undertaken by the Administration to find efficiencies in the operation of the Electric Fund and, thereby, to increase the amount available for.transfer from the Electric Fund to the General Fund. In accordance with our original charg~ we would recommend that the Electric Department. under these · circumstances, might be an excellent area for review by an outside consultant with a view toward increasing efficiency. We also question the necessity of the continued existence of.'and the function of that Fund which, in the Five Year Forecast, is called "Electric Escrow" but is more commonly referred-to as the "Electric Capital Reserve~" It is our opinion that this Fund has been maintained in the past to provide funding for very expensive new interconnection facilities between the City's electric system and APCO and that it. has been determined that such facilities are now no longer needed. If this is the case, it'is our'opinion that this Fund iB no longer needed and that a more accurate picture of the financial condition of the Electric Fund would be presented if the Unappropriated Surplus in the Electric Capital Reserve were combined with that in the Electric Fund. The Water Fund and The Sewer Fund In order to understand the situation in the Water and Sewer Funds over the next five years. we believe the figures on the Five Year Forecast must be combined with the figures shown on the attachment to Mr. Brown~s memo to Council dated September 21, 1988 concerning "Budget Questions - Councilman McClain." For the benefit of other Council members, we have combined these figures on Exhibits A'and B attached hereto. The basic change from the September 21 figures is in the unappropriated surplus at 6/30/88 which on the Exhibits and on the Five Year Forecast has been adjusted to the audited figure. The only other difference between the September 21 figures and the Five Year Forecast is in the projected Sewer Fund Revenues in FY91/92 and FY92/93 where the September 21 figures show the loss of revenue ~rom the -4-