Annual Operating Budgets for a Fictional Utility

This text discusses the annual operating budgets for a fictional utility. It compares the actual revenues and expenses from previous years (2009 and 2010) to the current budget year (2011). It also projects the budget numbers for the 2012 fiscal year.

Summary

The total revenues for the utility grew by only about one tenth of one percent (.11%) over the three-year period from 2009 to 2011. Meanwhile, total operating expenses over the same period grew by almost six percent (5.72%).

The decline in net operating income and net income over the three-year period was primarily due to the increase in operating expenses. Significant increases in system operating expenses over the three-year period have occurred in salaries, fringe-benefit costs, electricity and utility costs, insurance expenses, contract labor, and repair and maintenance costs.

The projected budget numbers for the 2012 fiscal year are as follows:

• Revenues: $681,625
• Expenses: $607,937
• Net income: $73,688

The assumptions that were made in preparing the budget include a 2.5% average water-rate increase for the year and that all operating expenses would remain approximately the same as they were in 2011.