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Poca acquisition adds deficit to Putnam PSD

By Ryan Quinn, Staff writer

SCOTT DEPOT — The Putnam Public Service District’s takeover of Poca’s aging sewer system is expected to add a roughly $190,000 deficit to a new account in the upcoming fiscal year.

But Putnam PSD General Manager Michael McNulty said the deficit can be paid off with surplus from the district’s general sewer fund.

In February, Poca voters agreed to sell the town’s aging sewer system to Putnam PSD for $1. On June 10, the state Public Service Commission approved the transfer, which will add Poca’s 670 customers and $1.8 million in debt to Putnam PSD.

For the 2014-15 fiscal year, which starts July 1, Putnam PSD will have a separate budget for the Poca system. McNulty said that’s because the town’s residents will continue to pay different rates than the more than 10,000 other Putnam PSD customers until the Public Service Commission approves a rate consolidation.

McNulty said after a budget meeting Thursday that he hopes that consolidation occurs in a year, by which time the district will have a better idea of how much it will cost to operate the Poca system and what kind of consolidated rate is needed.

For average residential sewer customers — those defined as using 4,000 gallons per month — Putnam PSD currently has a monthly rate of $39.64. Poca’s current rate is $47.29.

The Poca sewer budget projects about $381,000 in revenue and $571,000 in expenses, including $424,000 in operations and maintenance costs and $126,000 in debt and reserve payments. McNulty said he expects the Poca system to operate at a loss until the consolidation, though he hopes it will be assimilated into the larger sewer budget by 2015-16 fiscal year.

He said he didn’t think the Poca acquisition would be a big factor in rate increases because the system as a whole — not just Poca — is aging.

“I don’t think anyone should be concerned,” McNulty said. McNulty said there would be some changes at Poca’s sewer plant, the first being replacing gas chlorine with liquid bleach for disinfection. He said gas chlorine is dangerous and Putnam PSD isn’t comfortable using it.

For Putnam PSD’s proposed general water and sewer budgets for 2014-15, McNulty said it was too early to project the surplus that will be carried over from the current fiscal year, so that amount was not included in the projected revenues. Such carryover was included in the current fiscal year budget from last fiscal year, so comparing revenue and surplus between the current and proposed budgets is difficult.

The proposed general sewer budget anticipates a roughly $29,000 increase in sewer revenue, for a total of $6.47 million. It projects a $175,000 drop in expenses, to $6.02 million, for a surplus of $450,000 — up from $246,000 in the current fiscal year.

The proposed general water budget anticipates a roughly $221,000 drop in revenue to a total $4.18 million. That drop includes a loss of $287,000 in surplus carryover mitigated by gains in other areas, including an $83,000 increase in sales. The budget projects a $43,000 increase in expenses, to $4.12 million, for a surplus of $60,000 — down from $323,000 in the current fiscal year.

Putnam PSD’s board plans to approve the budget at a meeting 6:30 p.m. Tuesday at its headquarters at 107 South Poplar Fork Road.

Reach Ryan Quinn at ryan.quinn@wvgazette.com or 304-348-1254.


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