Cadott Village Board - Electric utility will stay with the village
Nic Alberson, operations manager at Chippewa Valley Electric Cooperative, was present for a rate case study, shared with the Cadott Village Board Oct. 7. The study found that if the village sold their electrical utility to the co-op, the general fund could not be sustained, requiring a referendum, falling on taxpayers. With that information, it was decided to keep the utility under village control. Photo by Ginna Young
By Ginna Young
At first, it seemed a sale of Cadott’s electric utility to Chippewa Valley Electric Cooperative (CVEC) was a done deal, but after members of the public asked the village board to take a step back, the board decided to reconsider. They engaged Ehlers to conduct a rate case study, to see if the sale was financially feasible and well-thought out.
The results of that study were shared Oct. 7, on what the impact would be from a sale of the electric utility.
“Ultimately, we’re looking to identify fiscal sustainability within the utility, whether you are owning and operating it, or not,” said Brian Roemer, with Ehlers. “It costs a lot of money to get these assets in the air and in the ground.”
Ehlers went back five years in the past, in order to derive future projects and current rate performance. By using a 10-year cash flow study, dealing with operating expenditures, depreciation, etc., as well as funding capital projects and rate impact, they were able to determine feasibility.
The purchase of the utility from CVEC would be for the outstanding debt of the utility.
“The only other financial benefit, would be some franchise fees that would come in for a period of time,” said Roemer.
If the purchase went through, some village staff would no longer be needed, freeing up allocation of funds.
“Village staff did a really nice job putting together how all the salaries and everything would be allocated,” said Roemer. “Essentially, without any other levy exception, the general fund would not be able to sustain itself. This would probably force a referendum, as the only way to increase the levy enough to pay for these re-allocated funds to the General Fund.”
It’s been agreed by all that updates are needed to the electrical system, but Roemer pointed out that the village could build in debt service over time, to complete projects.
“It’s just good to have the figures in front of to see where we’re at, what’s happening,” said trustee Terry Licht.
Currently, the village has a service contract with CVEC, which Cadott would need to rely on, as one lineman cannot do all the projects alone. If the offer to purchase was accepted from CVEC, they did offer to take on the staff the village would have to eliminate, but those workers intimated that they preferred to stay with Cadott.
In the two rate case scenarios Ehlers gave, there would be a biennial rate adjustment. The average impact on the residential bill, without a lineman, would be $36.70 monthly, over 10 years, with an annual $440.35, over 10 years. The average impact on the residential bill, with a lineman, would be $46.93 monthly, over 10 years, with an annual $563.20, over 10 years.
“It’s pretty comprehensive, I guess,” said trustee Ronnie Duncan.
After discussing the matter in closed session, members approved holding onto the electric utility.
