Between the lines: Running your business
By Gwen Kautz, General Manager
gkautz at dawsonpower.com
You own this company. Well, you and about several thousand more people that are served by Dawson PPD. You are public power. You elected a person to represent you in order to keep this successful business running smoothly. And those elected representatives hired a manager to run the operational aspects. Dawson PPD’s board of directors are happy with management’s ability to monitor and control expenses over the past few years. As an owner, you should be too.
We are currently in the middle of a cost-of-service study. These are done to make sure that our rates and cost to operate are allocated properly. An outside firm looks at this data and determines how much of each cost is attributed to serving each class of customer. The rates are then adjusted to minimize subsidy between customer rate classes.
Pending the results of the cost of service study, but based on our own analysis, a three percent rate increase may be necessary in 2018. I’m a Dawson PPD customer myself, as are my retired parents who are on a fixed income. As general manager, nothing is more difficult than letting our customers know a rate increase is on the horizon. But worse than that is to ask our customers to play catch up with larger increases if we don’t correct our course. Any business owner strives to keep his/her company healthy financially so we can continue to serve you.
The biggest portion of our budget is what it costs us to buy power from Nebraska Public Power District. Annually, we spend $35 million dollars to deliver electricity to our customers. We also make an aggressive investment annually into our system. We take pride in our effort to make sure our customers can depend on our service.
Over the past two years, Dawson PPD has made adjustments in our budgeting processes to ensure that we evaluate what we do and how we can do them more efficiently without impacting safety or reliability. Department budgets are scrutinized carefully. Cuts from 10 to 15 percent have been made.
In order to borrow money at very favorable interest rates, our net margin must be stabilized. Dawson PPD’s net margin has seen significant decreases over the past five years. Some of this is due to weather and a loss of kilowatt hour sales, some of it is related to increased costs to maintain our system on a day-to-day basis, and some is related to increases of goods and services purchased routinely such as fuel. Like all thriving businesses, it is necessary to keep some cash in the bank for emergencies or unexpected expenses. This rate increase will keep the margin from declining further.
Most “for profit” businesses prefer to keep about three months of operating capital in the bank. Dawson PPD does not ascribe to this particular practice because we are not-for-profit and feel that kind of cash would require over-collecting dollars from our customers. Your directors want us to run efficiently and effectively and maintain a well-run, strong distribution system for our collective future.
We want you to count on us being here for a very long time. To do that, we need to take care of what we have and plan for the future. You own us and we want to make sure your investment is well taken care of.
If you have any questions about the direction Dawson PPD is headed, please email me or you may email your director at email@example.com.