Oxford Utilities proposes $25.5M budget

Published 10:04 am Wednesday, May 15, 2024

The Oxford Board of Aldermen reviewed the Oxford Utilities $25.5M budget last week for the Fiscal Year 2025 with OU-ED General Manager Rob Neely.

The Board will vote on the proposed budget next week during their regular board meeting.

Since Oxford Utilities’ fiscal year runs from July 1 to June 30, it is approved separately by the Board before the remaining city budgets are approved. The fiscal year for the other city departments runs from Oct. 1 through Sept. 30.

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Department heads and the Mayor’s office have begun the budget process for the FY 2024-25 year.

In the proposed budget, OED estimated total spending of $25,508,787, offset by expected revenues of $25,776,221.

The electric department’s largest expense is purchased power from the Tennessee Valley Authority. More than 76% — or about $20 million — of OU-ED’s revenues go toward paying TVA for energy.

Total operating expenses are projected to increase 15% compared to FY 2024. Revenues are projected to decrease slightly (1.7%) compared to the projected FY2024 budget. The increases in expenses are mainly driven by inflationary pressures on materials and supplies, employee benefits and the recent increase in tax payments. 

The increase in expenses will result in fewer dollars available for capital projects in FY2025, Neely told the board in his written budget report. 

OU will not be requesting any local rate increase for FY2025; however, that could change in future years. 

TVA ended the Pandemic Relief Credit in October 2023, which effectively increased power cost to Oxford Utilities, returning the base rate to the level prior to the pandemic. This increase was not passed through to the customer base as some utilities chose to do. 

Due to the rising cost of operations and maintenance of the electric system, a local rate increase may be needed in future years to keep up with inflationary increases. 

As of March 31, Oxford Utilities provides electric service to 10,329 electric customers (8,373 residential, 1,641 small commercial, 231 medium commercials, one large commercial, 19 street and athletic customers and 65 lighting installations). This is a 1.3% increase in electric customers over the calendar year.

Oxford Utilities provides this service through three substations and over 100 miles of primary electric line. The average residential electric usage for FY2023 is approximately 966 kWh per month, a 2% increase compared to FY2022.

Oxford Utilities also serves 14,864 water customers, and 13,031 sewer customers and provides billing and customer service to 14,487 sanitation customers.