Monday, April 04, 2005

Lower utility costs due to telecom division

Blanchard in the Advocate preps us for the fiber portion of tomorrow's council meeting. It'll be another "special" (read late) session taking place after the ending of the regular 5:30 meeting at city hall.

As noted in the story, Council to discuss bond issue during special session, the centerpiece of this portion of the meeting will be the acceptance of the R. W. Beck engineering and feasibility report. The city charter requires that such a report be presented to the council and published at least 60 days prior to the projected fiber referendum.

Some of what is in the report is actually very interesting. It focuses on the effect that the telecommunications division of LUS would have on other utilities:

The R.W. Beck report says that the communications system should result in a benefit to LUS as a whole, "resulting in lower rates."

That's "primarily" because of the savings expected in overhead costs -- because many of the functions of the new communications division are shared by the existing utilities division, the report says.

The report also echoes the earlier study's conclusion that the revenues from the communications side of the business will be able to pay off all the new debt obligations.

However, the report says that should the revenues of the utilities system be needed to pay off those new bonds, "such exercise will not materially impact the financial condition of the utilities system."

It makes sense—LUS will have a larger revenue stream to distribute fixed costs, like billing, pole maintenance and the like. All divisions will benefit as the cost of delivering each separate service falls due to increased shared costs.

The better the telecom service does, the more we will save on all our utilities. That should have been obvious. And now that Beck has pointed it out, it is.

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