THE REAL COST OF INEXPERIENCE AND CRONYISM AT THE MLGW
April 4, 2007
MLGW Gas Division Income statement for the 11 months ended 11/30/2006 shows an Operating Loss of $16,267,442 as compared to Operating Income of $7,725,572 in the comparable 2005 period. This is a negative turnaround of $23,993,014.
The vast majority of this problem lies in the 2006 natural gas purchasing. Mr. Dana Jeanes, in a media interview, stated that the reason for the poor performance in 2006 was related totally to a decrease in customer gas usage. Mr. Jeanes is minimally correct … approximately $3,849,984 can be attributed to lower gas sales in 2006. There was a 2,228,000 MCF difference in the gas usage between the two years. That difference multiplied by the $.1728 Margin Block is the negative volume impact. That’s it, folks.
The very big problem was in the gas purchasing and the fact that all gas costs have not been passed through to the ratepayers. Apparently, MLGW made some major errors in gas purchasing, did not pass these costs through … and, had to "eat them". Being on the "outside looking in", it certainly appears as though the Gas Division made some commitments for future gas purchases (went long) during a period when natural gas prices were extremely high (Hurricane Katrina). Well, natural gas prices went down as fast as they rose … and, MLGW Gas Division was paying the very high prices they were committed to all through 2006.
This episode clearly demonstrates a serious lack of management competence and integrity in the executive offices of MLGW. A competent, seasoned professional utility executive would have had his thumb on this issue and it wouldn't have ballooned into a ~$20,000,000 loss for the stakeholders. Bottom line: there is, at least, a $20,000,000 screw up that was going to be paid for by ratepayers and stakeholders.
Seems, it is getting a bit more costly entertaining the Mayor's vagaries. When Lee was in the city Finance Division, he only fumbled with "budget numbers" … now, he is costing taxpayers real dollars. Almost everyone wanted an experienced utility professional to succeed Herman Morris as the President of MLGW, except the mayor. Now, it appears "the pigeons have come home to roost".
There are several exhibits contained in the pdf file below that supports our contention. It is hoped that the Board of MLGW and the City Council will review this information and take the prudent, and necessary, action.
Click here to see why your gas bills were so high for the last two winter heating seasons
April 4, 2007
MLGW Gas Division Income statement for the 11 months ended 11/30/2006 shows an Operating Loss of $16,267,442 as compared to Operating Income of $7,725,572 in the comparable 2005 period. This is a negative turnaround of $23,993,014.
The vast majority of this problem lies in the 2006 natural gas purchasing. Mr. Dana Jeanes, in a media interview, stated that the reason for the poor performance in 2006 was related totally to a decrease in customer gas usage. Mr. Jeanes is minimally correct … approximately $3,849,984 can be attributed to lower gas sales in 2006. There was a 2,228,000 MCF difference in the gas usage between the two years. That difference multiplied by the $.1728 Margin Block is the negative volume impact. That’s it, folks.
The very big problem was in the gas purchasing and the fact that all gas costs have not been passed through to the ratepayers. Apparently, MLGW made some major errors in gas purchasing, did not pass these costs through … and, had to "eat them". Being on the "outside looking in", it certainly appears as though the Gas Division made some commitments for future gas purchases (went long) during a period when natural gas prices were extremely high (Hurricane Katrina). Well, natural gas prices went down as fast as they rose … and, MLGW Gas Division was paying the very high prices they were committed to all through 2006.
This episode clearly demonstrates a serious lack of management competence and integrity in the executive offices of MLGW. A competent, seasoned professional utility executive would have had his thumb on this issue and it wouldn't have ballooned into a ~$20,000,000 loss for the stakeholders. Bottom line: there is, at least, a $20,000,000 screw up that was going to be paid for by ratepayers and stakeholders.
Seems, it is getting a bit more costly entertaining the Mayor's vagaries. When Lee was in the city Finance Division, he only fumbled with "budget numbers" … now, he is costing taxpayers real dollars. Almost everyone wanted an experienced utility professional to succeed Herman Morris as the President of MLGW, except the mayor. Now, it appears "the pigeons have come home to roost".
There are several exhibits contained in the pdf file below that supports our contention. It is hoped that the Board of MLGW and the City Council will review this information and take the prudent, and necessary, action.
Click here to see why your gas bills were so high for the last two winter heating seasons
posted by watchdog at
4:57 PM
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