Brent Billingsley, a certified public accountant with Campbell, Myers and Rutledge, standing, discusses the audit report for the Glasgow Water Co. at Thursday's regular meeting of the Glasgow Water and Sewer Commission.

GLASGOW – Glasgow Water Co.'s financial statements for the fiscal year that ended June 30 yielded a “standard clean, unqualified audit opinion.”

Brent Billingsley, a certified public accountant with Campbell, Myers and Rutledge who delivered the audit report at Thursday's regular meeting of the Glasgow Water & Sewer Commission, said that means “it our opinion that the financial statements are free of material misstatement.”

He reviewed a few highlights from the report with the commission that oversees the municipally owned utility, starting with the statements of net position.

Cash was down roughly $700,000 from the prior year, though still at $8,293,618, he said. Accounts receivable was consistent with the prior year and inventory was up a little bit, Billingsley said. Under liabilities, the accounts payable amount was more than double the previous year, but he said that was due to construction that occurred in FY 2019.

He said they found no significant deficiencies or material weaknesses regarding internal controls of the finances, and he concluded by mentioning that he had noticed that water loss was up a little this year and spoke with management about it.

“He immediately said that he had budgeted about $200,000 in meter replacement program next year; the change-outs in the last two years were running low, so he's already got that in the works for next year,” Billingsley said, then inviting any questions.

“Overall overview of the budget, you pretty satisfied with everything?” asked GWSC Chairman Jerry Botts.

Billingsley nodded in the affirmative, adding, “especially the balance sheet. The balance sheet's in real good shape."

Clint Harbison, engineering manager, touched on the subject during his report.

Continuing with an effort that started some months ago, GWC had tested 12 water meters at larger customers' locations last month, and their accuracy ratings were 86.80 percent and above, except for one where it was 43.43 percent.

“We've got a couple that we're looking at for replacement,” Harbison said. “To date, we only have three large meters remaining to be tested.”

The plan is to have those done by the end of this month.

“We're also kind of getting a plan together for how we're going to budget paying for some of these large meters, so what we've been doing is … working with Jeff and some of his folks on looking at what customers' average uses are, what our test accuracy is showing and then we'll do a comparison on, 'Hey, if we replace this meter and we get back our accuracy, what's our payback period?'”

The ones for which the revenue for the water use will offset the cost of the meter the soonest generally will be higher priority, Harbison said.

Scott Young, general manager, in his report, said GWC “is just now in our infancy of really trying to discover and detail out what water loss is.”

“As we attack water loss,” he said, “one of the things that we did, … a couple of years ago, we went in and updated the metering technology at Beaver Creek and Lucas [water treatment plants], because we knew that the metering was outdated. ... It's virtually impossible to even determine what your water loss is if you don't feel comfortable with the [number of] actual gallons pumped into your system. ... That was a very expensive and lengthy upgrade process.”

Another step was ensuring GWC was metering all of its connections, even where no billing for the water uses, for example, the wastewater treatment plant.

Next up, he said, the utility is “going to be really extremely aggressive in our wholesale, our commercial and our industrial meter-testing program.”

Young said this is important because not only is this locating sources of unaccounted-for water in the system, those lost gallons also represent lost revenue.

Some of those large meters cost $4,000 to $7,000, so he is looking at "innovative" funding options.

Aside from the larger meters, GWC is also ramping up its meter replacement program for the more typical customers, and that's where that money in the capital budget that Billingsley mentioned will come into play.

“We're going through and basically taking the oldest meters from within our system, from a residential standpoint,” Young said.

He asked with Jeff Reed, finance and customer service manager, how many they were expecting to get this fiscal year, and Reed said about 1,700.

“We're kicking that off now,” Young said. “That's going to greatly help our unaccounted water.”

He said water meters, because of the mechanical parts in them, tend to wear and slow down and then eventually just dies as they get older, but it's rare for one to just malfunction and show some sort of crazy different amount than what's being used.

Historically, operational costs for producing the finished, drinkable water product have been low enough it would not have been cost efficient to purchase equipment and implement methods to recapture it, but with increasing operational costs, that threshold could be approaching.

“There are systems out there that have 40, 50, 60 percent water loss, and they're purchasing water, so we're in no means in a critical point of where we are, but we've got a lot of work to do to fine-tune and reduce some of those costs,” Young said.

Other business included the announcements by Billy Carver, operations manager, that the fourth phase of the 24-inch redundant water line coming from the water treatment plant at Lucas into the Glasgow was operational as of Sunday, and the relocation of a 12-inch water line to make way for a walking/cycling path in the Bowen Avenue area was also completed.

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