The Debt and Its Management

Debt and Its Management

As if the recent droughts, fires, and tornados weren’t enough, now there’s talk about utility troubles. Analyzing Utility Finances during times of crisis is vital to businesses, municipalities, and homeowners. Dr. Ted Kury, the President and CEO of The Utility Savings Corporation (USC) in Columbia, SC will lead this effort. He will be joined by up to thirty participants from across the nation who will work together online and live through the utility problems to come up with solutions.

 

To help our utility finances

Kury will be working closely with several utility companies to review past and future budgeting to find out what’s working and what’s not. This analysis will help USCs newly minted Utility Management Association of America (UMAA) Board of Directors determines what changes are needed to better serve consumers. Kury and his team hope to develop a utility affordability plan that can be implemented by all carriers, thereby reducing the strain on their revenues.

 

The University of South Carolina’s School of Business

and Public Administration has produced a study showing that rates are highest in the “food belt” of cities. Kury and the UMAA board will be looking at ways to help minimize food costs by using cost-efficient methods, such as bundling of services and reducing customer call handling costs by using voice-mail marketing and other cost-saving measures. Cutting unnecessary costs is only part of the plan; lowering revenue is essential. Kury and the board will be looking at cutting expenditures by 20% across all utility markets. The board governance will also look at developing new revenue streams that will replace the lost revenue from reduced rates and bundling programs.

 

Our country’s dependence on groundwater supplies

has spurred many debates regarding the reliability of municipal drinking water utilities. Groundwater supplies are not only the source of most of our towns’ drinking water, but also the supply for agriculture, animal production, animal sheltering, drinking water for non-urban residents, and recreational uses. Groundwater is a precious resource that is not always protected by law. In many areas of the country, farmers are required by law to test for harmful contaminants before supplying water to local cities and towns. The contamination level in many of America’s rivers and lakes is already known to be unhealthy.

 

A report was released recently

by the Environmental Working Group that examined the condition of our nation’s water infrastructure. The report highlighted many problems, including aging pipes, ineffective stormwater management systems, and outdated treatment facilities. The E WWG found that our country’s rivers and lakes were experiencing a deteriorating quality of care that resulted in poor water quality, inconsistent water treatment, increased pollution, and a lack of protection against contaminants that pose serious threats to public health. Many cities face serious threats to their water infrastructure needs and revenue. Water service revenues are falling and utility budgets are being cut.

 

Utility profits are falling because utility companies

are not raising rates fast enough to make up for lost revenues. Customers are not making their payments on time, and utility companies cannot predict when they will be able to recover any lost revenues from delinquent customers. Financial statements generally do not include an accounting of all utility revenues or expenses. To obtain accurate and comprehensive financial statements for individual utility companies and the entire utility industry, a reliable, reputable accounting service should be used. Accounts receivable and accounts payable are the two types of accounts that utilities account for. In addition to income from sales of products and services to customers, utilities account for revenue received from the production and processing of gas, oil, and water.

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