The Hope Water and Light Commission held their May meeting on Wednesday, May 27, at 7:30am via Zoom, continuing to abide by the COVID-19 guidelines. The meeting was called to order by Chairman Dr. Lester Sitzes, III and a motion was made to approve the minutes from the last meeting. The motion was seconded and the minutes were approved by the commission.
The 2015 Bond Series Refinance
Earlier this year rates were being monitored and it was concluded that refinancing bonds would be possible to save the commission a little bit of money as it relates to annual debt service. Principal amount outstanding amounts to $7,805,000 as of May, 2020. Hope Water and Light (“HWL”) has one revenue bond issue secured by water and electric revenues. The bond issue will be able to change on October 1, 2020. Bond refinancing is generally used by state and local government to achieve debt service savings on outstanding bonds or restructure outstanding debts. Based on market conditions, HWL may be able to refinance its Series 2015 Water and Electric bonds at lower interest rates to produce cashflow savings of $639,299. On a net present value basis, the potential benefit is 6.766% of refunded principal. The estimated cost to refinance will amount to around $150,000 due from HWL. A motion was made to approve option one and seconded to be approved by the commission.
Charlotte Bradley was present to discuss financials and income statements for HWL March and April for fiber to the home, water and electricity.
For March, revenue was up about $12,000 and for the year, it is up about $22,000. Expenses are up about $2,300. April water revenue had a profit of about $16,300. For the year, water revenue was up about $30,500.
For March there was a profit of $28,000 for electricity revenue. Operating revenue was down about $1 Million for the year. For April there was a negative $95,000 and revenue was down in residential class by about $42,000. Operating revenue was down compared to last year by about $1.3 Million. Expenses were down by approximately 1.1 million. Year to Date revenue was down by about $200,000.
Business Case for FTTH Project
The need for an additional survey was presented in the memo to the members boiling down to looking at the survey for interest for FTTH, turning out that it’s not a good survey to determine the actual take rate. A proposal of 360 statistically valid surveys by telephone will take place. The commission received 2 quotes; one from CCG for $9,000 and one from Artemis for $7,460. Staff is recommending that they go with CCG to provide a better feasibility study. The bid from CCG was accepted by the members and approved.
An additional 7 gate keepers are needed in order for the AMI network to be at its full potential. The 7 gate keepers will allow the system to be maintained at a better level being better for business. They will not approve the completion acceptance test until the key performance indicators that are being used are met. Some of the key performance indicators aren’t being met due to the inability of the network to get all the readings back to HWL in a timely manner.
The Transmission Project – A copy of a letter from SWEPCO was presented to the commission pertaining to all cost recoveries being done in SPP. SPP announced that they will not be doing face to face meetings at least until August 1, 2020.
A representative from Utility Financial Solutions shared that he was asked to look at the new rate (Rate 6) for a potential large industrial customer, as well as economic development rates that could potentially be used for new customers that come to Hope. They went back to the cost of service study and ran a new potential customer through the system to see what the rates would be and it identified that the demand charges are lower than the cost of service. The current rate is $5.40/kw and the demand should be higher at $13.40/kw. The proposal for a 3 and 5 year economic development rate schedule was presented to the commission that could be used to attract and help new industry coming to the area. A motion was made to accept Rate 6 as presented and it was approved.
Charlotte Bradley discussed the precautions being taken at HWL by the staff, stating that they have been working 6 feet apart, regulating the team color coded work schedule. If they are sick or feel sick, they are required to stay home. Initially, HWL was planning to open the doors to the office on June 1, but after much discussion by the Commission, that will be delayed until July 1st unless there is a decrease in cases. Customers are currenly allowed to enter the building with an appointment. They must wear face coverings and their temperatures will be checked. If a customer needs to make an appointment, they may call 870-777-3000 and press 1. When HWL does open the doors back up to the public, they will be removing all chairs in the lobby to keep people from socializing and risking contamination.
The commission members went into executive session for a few minutes towards the end of the meeting and the meeting was then adjourned. The next HWL Commissioners meeting will be held June 24, 2020.