While Piedmont collects from customers almost twice as much as it spends to provide electric power each year, every winter it struggles to pay those wholesale expenses, racking up thousands of dollars in late fees.
This month Piedmont owes its wholesale power provider, the Alabama Municipal Electric Authority, $190,698 for an overdue January energy bill, and last week the city paid the company an additional $140,689 for another outstanding bill, officials said. Piedmont also will be charged a late fee that totals 9 percent of the past due amounts.
"We would love to be paying that power bill off each month, and that's our goal," Piedmont Mayor Bill Baker said Tuesday. "Right now it's a little rough."
During the first three months of each year, the city's tax revenue slacks off and Piedmont temporally experiences a financial shortfall so severe it can't cover all of its expenses, city officials said. As a result, the city falls behind on its power bill. But by early spring, the tax revenue begins to increase and the city is able to pay the bill on time.
"We have always had trouble paying the bills," Baker said. "It happens every year."
Councilwoman Mary Bramblett agreed the problem is cyclical. With the exception of one term in office, she has served on the council since the early 1990s and said each year the city struggles to make its power payments during the first three months of the fiscal year.
Piedmont buys electricity in bulk from wholesale energy providers. It processes that energy at local substations and resells it to residents and businesses.
This year the city expects to collect about $4.2 million from residential and business customers of its electrical services. In that same time period, the city expects to spend $2.7 million to provide the utility, according to the city's utility budget.
The city collected a little more than $1 million in revenue from power payments for the first three months of the fiscal year, a city official said.
When revenue from tax collection slacks off during the fall and early winter months, the city uses the utility surplus to make bond payments, cover salary expenses and departmental costs. The surplus is enough to cover most of the city's expenses throughout most the year, but Councilwoman Brenda Spears said the city can't keep counting on the Utility Department to pay for other expenses.
"We can't pay our bills in my opinion because fixed costs are killing us," Spears said.
Councilman Frank Cobb has also said he worries that the city won't have enough money to cover costs during an emergency or to make repairs to the city's electrical infrastructure if it is damaged.
Electrical Superintendent Casey Ponder said the city operates two working substations, power poles, power lines, transformers and several other pieces of technical equipment. City officials could not immediately provide the value of Piedmont's electrical infrastructure, but Ponder said if one of the city's two main transformers goes down it would cost $500,000 to replace.
The city is dismantling a third substation, which has been inoperable for more than 20 years, he said.
Spears, Cobb and Councilmen Mark Harper, Kenny Kelley and Terry Kiser said this week that they think the city needs to make changes to better manage its finances throughout the year.
Attempts to reach councilman Ben Keller were not successful this week.
Cobb and Spears said the city's bond debt for a new city pool and high school athletic facilities has made it increasingly difficult to cover the expenses. Spears said that debt and utility bond debts, which was all either incurred or refinanced in 2010, cost the city about $70,000 each month. The debt is scheduled to be paid off in 2040.
Cobb, Harper and Spears said the city needs to consider making cuts and attracting new businesses, and Harper said the council also should consider a new one-cent sales tax to cover bond debt it took on in 2010.
"I know it's not going to be popular," Harper said. “But, it's really something we need to look at.”
Staff writer Laura Gaddy: 256-235-3544. On Twitter @LJohnson_Star.