2011-10-25 Water Board Minutes - Laserfiche WebLink

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Mr. Taniguchi said the receivables had remained pretty constant before, but this time the receivables jumped. Mr. Sumada said that the number goes up and down; although the number of accounts is constant from one month to the next,the amount that is billed is very different. This can be seen when looking at the consumption that is billed from month to month, he said. It can be 800 million gallons one month, and then go down to 600 million gallons the next month. The fluctuations are of that magnitude from month to month, and that impacts the receivable amount, which is related to consumption. The Manager-Chief Engineer said that Mr. Sumada had recently done an interesting report about consumption. DWS has had a huge reduction in consumption over the years,which is leading to less- than-desirable revenues, he said. Mr. Sumada said that the report, which looks at Operating Results for Fiscal Year(FY) 2011, includes an analysis of consumption for the past five years. From FY10 to FYI 1, consumption dropped about 700 million gallons; in FYI 0, DWS billed for 9.5 billion gallons and in FYI 1, it dropped to 8.8 billion gallons. This represents a tremendous decline in consumption. Mr. Sumada said that Ms. Myhre had looked at pumpage over the same period, and the pumpage followed the same trend as consumption. Because consumption plummeted so sharply,the revenues that DWS thought would increase in FYI I failed to increase at all. In fact, DWS lost money in FYI 1, budget-wise. DWS was expecting to generate $2.8 million in FYI I to help contribute to C.I.P. construction. However, because consumption fell so much, DWS ended up losing $400,000.00 for the year, Mr. Sumada said. Mr. Inaba said that another contributing factor to the decline in consumption was the high level of rainfall in Kona over an extended period recently. That area posted the biggest drop in consumption, he said. The Manager-Chief Engineer said that another factor is the lack of construction projects, which are a major consumer of water. Construction projects use huge volumes of water for dust control and to keep the job sites clean. With few construction projects underway,that kind of consumption is absent. Mr. Sumada said that in conjunction with consumption was the Power Cost. Looking at FYI 1,the Power Cost that DWS paid was $1.8 million more than the Power Cost revenues that DWS collected. That, along with the decline in consumption, wiped out any revenues that DWS thought it would be able to contribute to C.I.P.,he said. Mr. Taniguchi asked whether the receivables amount includes the Power Cost. Mr. Sumada confirmed that it does. Mr. Taniguchi said that the receivables this time jumped by about$1.7 million, which is a huge change. Therefore, he was just wondering what caused that; all of a sudden, DWS was billing way more than it had been billing. He now understood that it was the timing, and it could also be the Power Cost,that caused the big jump. The Manager-Chief Engineer said he did not see how DWS could adjust the Power Cost Charge more frequently than every other month, because of the statutory Public Notice period. Mr. Taniguchi said he was just asking why the receivables jumped so much. Mr. Meierdiercks wondered whether the Board could use these numbers, assuming they keep going consecutively,to anticipate the Power Cost and raise it accordingly. He said that, after all, it is an actual cost, and it would be over time. Page 13 of 21 10-25-11—Water Board Minutes js