Our recent report on the wealth of the City of Tallahassee electric utility published on January 19, 2011 generated a response from the City of Tallahassee. On Friday, Tallahassee Reports received an email from the City that indicated the report was one sided and should have included a different calculation.
The initial report compared the wealth of seven municipal utility systems using the combination of restricted and non-restricted portions of the electric utilities net assets (This will be referred to as “Current Net Assets”). The data clearly showed that the City of Tallahassee had the highest current net assets per customer among the group of utilities in the comparison.
As stated in the article, the purpose of the comparison was to provide information to aid in the discussion over the proper level of the electric reserve. The measure of restricted and unrestricted assets gives an indication of the “reserve wealth” of a municipal utility. That is why these categories were used in the original comparison.
The comparison was completed after the City Tallahassee informed Tallahassee Reports that the electric reserve goal of between $119 and $182 million was “generated by COT staff and not determined based on any outside sources.”
City staff has indicated that a comparison of Total Net Assets would provide a better measure of wealth. In an effort to move the discussion forward and to provide as much information as possible, Tallahassee Reports has provided that information in the chart below. Also included in the chart is the Current Assets per customer, which was included in the original analysis.
The information below was gathered from 2009 Annual Reports and Financial Statements.
|City||Customers||Total Net Assets||Total Net Assets($) Per Customer||Current Net Assets ($)||Current Net Assets ($) Per Customer|
|Gainesville, FL||93,129||$273,383,238||$2,936||$63,303,621||$ 680|
|Lincoln, NE||129,332||$243,163,000||$1,880||$111,979,000||$ 865|
|Orlando, FL||264,734||N/A||N/A||$174,017,000||$ 657|
The additional information shows that Austin, Texas is ranked first in Total Assets per Customer out of the six utilities. The City Tallahassee is ranked second.
This new information taken with the findings of the original report would still support the statement that the City of Tallahassee is the wealthiest electric utility in the comparison group.
Questions that remain unanswered:
Why is it necessary to have so much cash on hand?
Would it be better to have a credit line, like other utilities, and put the cash back in the economy or reduce debt?
How can Gainesville operate with just $60 million in reserves and the City of Tallahassee needs $248 million?
Why does the City of Tallahassee keep saying that the electric reserve is $105 million when audited financial statements indicate a much higher number in reserves?
There may be good answers to these questions, but they have not yet been provided by the City of Tallahassee.