By Staff Reports
Utility disconnections for unpaid bills are set to begin this month, according to Tim Hall, Henry County Administrator and General Manager of the Public Service Authority (PSA).
Hall told the PSA board that he expects the list to be “huge.”
The PSA board also learned that a new contract was negotiated for online payment fees. The agency has waived online payment fees for customers and absorbed the associated costs since the beginning of the pandemic.
Richard Stanfield, deputy finance director, said that in April, the PSA paid $7,855 for online payments. Under the new terms, the PSA would pay $1 less per payment, for a savings of $2,655 per month. He said the savings would amount to $32,000 per year.
Stanfield noted the PSA would save $1 per payment if customers pay with a check.
Tim Pace, director of engineering, said he is concerned about the future costs of projects which are planned but have yet to go out for bid given the rising cost of materials like lumber.
“We built a budget around these projects several years ago,” Pace said. “Contractors are very busy. Material costs are way up and that usually does not bode well for projects that we are bidding.”
Pace said the main projects of concern are related to the Philpott Water Plant expansion.
He also noted that the PSA is currently seeking part-time workers to assist with fire hydrant painting over the summer.
The board also heard a report at its May 17 meeting on 2020 water and sewer operations pertaining to the 1991 Master Trust Agreement between the authority and Crestar Bank.
The Lane Group, Inc., which prepared the report, recommended no changes, and found the authority in compliance of all six sections pertaining to revenues and funds.
The PSA provides service to approximately 12,306 customers for water and 7,041 customers for sewer, according to the report.
“The authority’s system is well maintained and has responded favorably to financial adversity resulting from significant industrial customer losses and economic downturn in recent years,” the report stated.
The adopted fiscal year 2021 Direct Operating Expense Budget amount was about $8.7 million. Of that amount, approximately $867,799 was for debt service interest and the remaining $7.8 million was for operating costs. Compared to the previous fiscal year, the operating expense budget was 7.2 percent higher.
As part of the replacement reserve requirement, the PSA is required to maintain no less than $400,000 in a reserve fund to have available for extraordinary operating expenses and unusual losses or damages. The current fund balance of the reserve fund is $572,251.
The PSA has not had a rate increase since 2013. The average growth rate for water production was about 3.2 percent per year over the last five years. Additionally, the sewer growth rate during the same period was approximately 1.8 percent per year.
Based on the adopted FY 2021 budget, the PSA anticipates a surplus of about $1.2 million. The report noted the surplus is significant in comparison to a sharp decrease in customer billing revenues due to the pandemic.
The PSA is required to maintain a debt service coverage ratio in excess of 1.2. The adopted FY 2021 budget’s debt service coverage ratio was predicted to be about 1.782, which meets the minimum requirements without transfer of funds from other reserves. Unrestricted cash reserves for the PSA sit at about $17 million as of June 30, 2020.
As part of the 1991 Master Trust Agreement, the PSA is required to maintain not less than two month’s direct operating expenses in reserves. The PSA established a $1 million operating reserve fund in FY 2004. Currently, the balance sits at $1.6 million. Two months of direct operating expenses for the adopted FY 2021 budget would equate to about $1.4 million, meaning the current balance exceeds the requirement.