Thursday night’s Board of Water, Electric, and Communications Trustees meeting was an abbreviated meeting prior to the holidays. In addition to routine agenda items, the Trustees approved a revision to planned expenditures for a power plant circulating water pump and revised accounting for power plant decommissioning costs.
The 2023 approved Budget included $100,000 for repair expenses for a Unit 9 circulating water pump (the “9A Circulating Water Pump”). Age and condition of the pump made disassembly difficult for the vendor. After MPW Staff visited the repair shop, adjustments were made to the planned work that reduced the initial revised cost estimate; however, the modified scope increased the estimated cost to $202,437. With MPW labor, taxes and contingency, the project cost increased to $254,400. The Board approved a new Project Summary Form for that amount.
Included in the 2023 and 2024 approved Budgets are expenses for future decommissioning and demolition (together “decommissioning” of coal-fired power plants. No firm dates have been set for this work, but the decommissioning will need to be completed at some point in future. The work is expensive and needs to be recognized and recovered from MPW customers that get the benefit of the electricity generated by these MPW power plants. Revised accounting was reviewed with the Board that would better ensure recognition of the liability, routine expensing (like depreciation) of the costs in advance of cash outlays and accumulation of cash so MPW does not need to borrow funds at the time of final demolition and increase electric rates when those funds are borrowed.
By Board Resolution, the new accounting treatment was approved retroactive to January 1, 2023.
In other business, the Trustees:
- Approved minutes of the November 30, 2023 Board meeting.
- Ratified November Utility expenditures.