Someone very familiar with Lake Worth Utilities wrote the following e-mail with no response from the CM or the Utility Director. It went to both of them.
June 26, 2010
After reading Susan’s proposed budget for calendar year 2010/2011, and knowing as much about your city as I do, I would like to submit a group of revenue generating ideas for you to consider. You and I have already spoken about one, but the remainder may be new to you…….and the city may already be considering some of the other suggestions.
Generating revenue via the installation and maintenance of Private Area Lighting. You and I have spoken about this previously but neither of us put the numbers together.My estimate would be that the City would generate between $80K to $120K per year over and above the cost of the light, the energy costs and the maintenance costs.This is based upon a 3% coverage of your 12,000 customers. You and I both understand that once PAL’s are initiated, that the demand will grow exponentially, especially in the high crime areas.(PAL’s should never be provided to a customer without a signed two year contract.)
Yet another segway off of the same lighting idea would pertain to the area of existing business (outside) lighting. Business’ normally hire outside electrical firms to install lot lighting, and should continue to do so. But, the utility can step in and offer a service that few, if any, business’ consider, or apply.That service pertains to the setting of time clocks and the polishing of glass. While this may not seem worthwhile for the utility to undertake, I can assure you that the return on investment in both good will and dollars is substantial. Car lots, restaurants, stores, etc. are accustomed to spending between $100 and $1,000/month on these outside lights……and that is simply in terms of kwhr usage.
Once your energy savings personnel explain that the cost of your official visiting their place of business once a month to reset the time clocks (no charge to the customer) will result in a yearly savings of hundreds, even thousands of dollars, then the economics becomes clear to the business owner. Then offer a maintenance agreement at “Rates For Outside Services” and you have become an integral part of all business’ who wish to participate.The revenue generated from this will be minimal (one-half of all up & down labor costs) – or $25K to $50K per year, but the good will and off peak loading will be enormous.
Lock in long term fuel prices. Slowly convert all fleet vehicles to diesel and lock the price in. Once fuel goes back up, it will stay there. Remember, Southwest Airlines has maintained a positive cash flow throughout the hard times by using this strategy. Potential savings could be as much as $400K/year for your fleet and that is if gas prices only go up $2 from your contract price. All new customers, whether they be residential or commercial, should be paying the full cost of service – including all labor costs.Those customers who require substantial changes to infrastructure should pay those costs also.STOP giving your services away!
As a contractor, I was the first, and possibly only, person at the LW Utility to charge a private contractor all up and down labor and unsalvageable material costs. (This was for the apartment building south of Lake Worth Beach) Upgrades and service costs should be calculated by the Estimator and paid by the customer prior to the crew setting a foot on the customer’s property. While this is not a revenue generator as such, the cost savings to the Utility in give-aways could be as much as $300K -- $500K per year.
Customers should be billed all ‘Up & Down Labor’ costs for all temporary services. Again, this is not a revenue generator as much as a revenue saver. Dollars saved here can be used elsewhere.
Possibly the largest revenue generator outside of a new commercial business would be the renegotiating of all of your “Foreign Attachment” contracts. Ask your attorney’s to negotiate new fees to both Cable TV and all of your Bell providers. Increase you attachment fees (per attachment or per pole) to a minimum of $15 --$30/year per pole. This will typically generate between $500K and one million dollars annually for a city of Lake Worth’s size and area. Conduct a safety and NESC audit at the same time you are doing the attachment audit and charge each company a replacement fee for any outstanding code violations which are caused by them.This will permit you to upgrade your system while correcting all code violations.Establish a min-max (Just-in-Time) stores handling system. While this will not generate revenue in the strictest sense, it will save valuable dollars overall.
Possibly the single largest expense to the utility is in overtime hours. Eliminate these by reducing your SAIDI numbers.My guess is that you currently have a SAIDI number between 400 and 600.By reducing this to a SAIDI 50 and returning the savings to the utility for system upgrades, you will achieve the highest levels of reliability while saving the City dollars at the same time.
Much of what I have just stated will depend entirely upon how proficient your Estimating personnel are at conducting the day-to-day business of the utility.Record keeping and mapping are an essential part of the aforementioned savings and I assume that your departments are up to the task.I have provided upwards to one million/year in savings and revenue generating ideas. And, while these ideas are only a small portion of a much larger picture, it is easy to see where the city can generate revenue’s while maintaining a high standard of service.If the same ideas were applied to the other departments, then there might even be light at the end of the budgetary tunnel.
Thanks,
2 comments:
The question is did our utility implement any of these suggestions that would not have cost anything? Did they lock in prices?What say you city manager?
I don't recall them every mentioning prices, just spending money on a FEMA membership. Look, no one knows what goes on at the Utility--NO ONE.
Post a Comment