With the end of the current fiscal year approaching, the Frankfort Plant Board got its first official look at the upcoming fiscal year’s budget at a special meeting budget session on Wednesday.
The document presented by Chief Financial Officer David Denton also included a five-year financial plan for the municipal utility entitled “Frankfort’s Future… Now.”
After taking a 2% dip this year, the operating revenues for the budget presented to the board for fiscal year 2021-22 would return to roughly the same as fiscal year 2019-20. The next fiscal year’s operating revenues were presented at $101,979,795. The budget passed last year was $100.2 million.
One major highlight from next year’s proposed budget per Denton were the fact that rates — aside from cable network pass-through rate increases — would not increase.
“One of the biggest things the plant board can do for this community is offering reliable service that is economical,” Denton said. “You have those around you, who we're competing with for industry or for residents to come move here, that are raising rates. FPB is holding steady.”
Kentucky Utilities rates in Lexington recently went up by around $8 per month.
Another highlight, per Denton, is that customers would once again receive a rebate of around $30 on average. The electric rebate is funded in the five-year plan for a total of $1.6 million each year.
The proposed budget would also greatly reduce debt while also paying for major projects such as the Tanglewood Reservoir replacement project, Advanced Metering Infrastructure (AMI) and fiber to the home.
“We’re able to heavily invest in infrastructure, pay down debt, and a lot of other things without changing rates in this next year,” Denton said. “So we feel like that's a very exciting thing to talk about.”
Denton mentioned that the AMI project would cost around $9 million over the course of two fiscal years. The Tanglewood Reservoir replacement is slated to cost about $7.1 million, a significant increase from initial plans which were changed after pushback from neighborhood residents and the city of Frankfort.
Denton said that in the budget proposal payments would be made to reduce the FPB’s existing long-term debt by 76%.
Projections for FPB's wholesale power supplier — Kentucky Municipal Energy Agency (KYMEA) — costs are up somewhat, and are projected to increase by about 1% each year over the next five fiscal years.
On the employee side, the proposed budget would get rid of the lowest two pay grades at FPB, raising the minimum wage there to $13.99 per General Manager Gary Zheng. Board Chair John Cubine said that the change would help FPB compete for workers with large employers, many of which are also raising their lowest pay grades.
As it has been in recent weeks following a proposal for a large-scale local solar project, renewable energy was a focus of board discussion when directors talked over potential changes to the budget.
Director Kathryn Dutton-Mitchell said that she would like to continue discussions surrounding a local solar project despite the board cooling from the one proposed by Andy McDonald and former FPB Vice Chair Walt Baldwin.
“If there is going to be a community solar project, maybe we should take the reins at studying that,” Dutton-Mitchell said. “My concern was that if during this fiscal year the board decides to do another study, our own internal study, it always starts with a survey... I just didn't want to get into this fiscal year and say, ‘oh, we'd like to start that study,’ and we either don't have capability in-house or we don't have funds for that.”
The board later agreed that a survey regarding such a solar project could be conducted using its internal workforce.
Another renewable energy conversation that took place had to do with charging stations for electric vehicles. The budget contains $60,000 to create three new charging stations, in addition to the three currently in downtown Frankfort. Chief Operating Officer Vent Foster suggested that two of the new charging stations could go on opposite sides of town — West and East.
The board also agreed to give employees a 2% cost-of-living salary increase across the board to match the raise that Franklin County Fiscal Court approved for its employees last week. Cubine said that the board could reconsider that raise if the city gives employees a higher raise.
Director Dawn Hale expressed confidence and contentment with the budget process this year, and FPB’s finances in general.
“I just think that the plant board and our customers should be really happy with the plant board’s financial planning and keeping our infrastructure current and up to date,” Hale said. “If you look across the country, there are so many places, particularly with water and other things, that have real issues because they haven't kept their infrastructure current and up to date. We have, so that's a real advantage to our community and our customers.”