COMMON COUNCIL OF THE CITY OF EVANSVILLE, IN
CIVIC CENTER, ONE MARTIN LUTHER KING JR BLVD
ROOM 301
EVANSVILLE, IN 47708
June 7, 2012
Umbaugh & Associates,
Certified Public Accountants, LLP
8365 Keystone Crossing
Indianapolis, IN 46240
Attn: Mr. John Seever, CPA
IN RE: Indiana Utility Regulatory Commission
Evansville Water & Sewer Department
Docket Number 44123
Mr. Seever,
In reference to your firm’s testimony per the above matter, as the Finance Chairman for the Common Council of the City of Evansville, I have reviewed the submitted documentation as filed. According to your firm’s expert testimony, as evidenced by your submission, precisely, Exhibit DLB-1, page 7, (Joint Petitioner Case-in_Chief), Mr. Douglas Baldessari, an Expert Witness under the employment of your firm entered testimony whereby his analysis spanned twenty years resulting in savings to the ratepayers of our City equaling $87,492 though out the entire project, not simply each year, but, cumulative. And most amazing, the investment total, including Interest During Construction (IDC) and Allowance for Issuance and Rounding equals approximately $57,000,000 or .15% of the risk capital.
Within the approximate $57,000,000, includes IDC of $4,275,180 plus the allowance for issuance of $1,101,388 totaling $5,376,568. The water portion of the IDC and Allowance per your documents is stated at $1,437,150 and $381,252, respectively. Per your firm’s amortization, page 7 titled Comparison of Guaranteed Savings From JCI (Johnson Control, Inc.) Contract & Estimated Installment Payments, your exhibit starts with the total cost of the project including capitalized interest (IDC) and the allowance for issuance equals $56,690,000 which was previously rounded to $57 million, includes the interest for the two year as capitalized interest amounting to $718,575 per each year, totaling $1,437,150. Now, with the total cost including the IDC & Allowance already included in the amortization, the interest of $1,437,150 would be in error in considering the savings. Thus, instead of the project saving our ratepayers $87,492, in fact, the project will not save but COST them $1,349,658, clearly in violation of the Indiana statutes. This is apparent, and, as the finance chairman of the Council, demands immediate correction to be filed with the IURC. For consistently sake, if the IDC was correctly included, then why not the Allowance? My opinion is supported by several of our CPA colleagues.
In further review, at the time of executing the contract on November 28, 2011 by the president of the utility board, it appears that the cost of the Network Infrastructure was a guaranteed maximum price and the minutes clearly indicate that the cost was not yet determined and, subsequently, when those cost were determined, 21 miles of fiber optics was excluded; thus, addition costs driving the cost vs. savings.
In review of your document, page 137, shows non-measured savings of $468,646 as a result of terminating seven positions, but, in fact, those positions will be relocated. Even though, you may consider attrition, your exhibit fails to phase out those positions though out the periods. We will not instantly save those dollars. Considering the margin of .15%, this, in my, opinion would be material.
Further review reveals that your exhibit (DLB-1, page 4) allocates the new meter cost of $21,684,738, 50% to Waterworks and 50% to Sewer. Obviously, the utility does not meter waste? Then, why would $10,842,369 be associated to Sewer, and, even if, somehow, the allocation could be rationalized, why doesn’t 50% of the savings be allocated to Sewer?
Please indicate the time period for the correction of the capital interest issue. Of course, if you desire to discuss the above my office number is 812-473-3388 extension 229 and the email address is jfriend@johnfriendandco.com.
Sincerely,
John E. Friend, CPA, CVA
Finance Chairman
Common Council of Evansville, IN
CC: Indiana Utility Regulatory Commission
Hon Lloyd Winnecke, Mayor of Evansville, IN
Mr. Jeff Hatfield, President of the Utility Board
City Clerk Office for the City of Evansville, IN
Attachments
Source: Anonymous and posted without opinion, edit, or bias by the CCO
Thank you Mr. Friend! Let’s put a stop to this madness and who the heck was dumb enough to fall for this in the first place?
If Winnecke can find a way out of this Weinzapfel debacle, even this old Rev. Wright may vote for consolidation. If he can’t my vote stays NO.
I think they actually do meter a few sewers, mostly industrial accounts that use water but don’t put it down the sewer, such as a bottling plant
I hear Weinzapfel is madder that a old wet hen at Councilman Friend over this. Thumbs up to John Friend.
this post needs a thumbs up button
Just goes to show whose still running the city.
Its refreshing to see a city councilmen put Evansville first and not politics. Keep up the good work Mr. Friend and keep asking those questions!!
Comments are closed.