Annual Financial Report
Morristown Utilities Commission
(An Administrative Unit Accounted for
as Enterprise Funds of the
City of Morristown, Tennessee)
Year ended June 30, 2015
Morristown Utilities Commission
Annual Financial Report
Year ended June 30, 2015
Financial Section
Report of Independent Auditors.......................................................................................................1
Management’s Discussion and Analysis .........................................................................................4
Balance Sheet ...................................................................................................................................8
Statement of Revenues, Expenses and Changes in Net Position ...................................................10
Statement of Cash Flows ...............................................................................................................11
Notes to Financial Statements ........................................................................................................13
Required Supplementary Information
Schedule of Funding Progress for Morristown Utilities Retiree Benefit Plan...............................40
Schedule of Employer Contributions for Morristown Utilities Retiree Benefit Plan ....................41
Other Supplementary Information
Schedule of Long-term Debt Principal and Interest Requirements—Power System ...................42
Schedule of Long-term Debt Principal and Interest Requirements—Water System .....................43
Schedule of Long-term Debt Principal and Interest Requirements—Wastewater System ...........44
Schedule of Long-term Debt Principal and Interest Requirements—Broadband System .............47
Statistical Section (Not Covered by Report of Independent Auditors)
Schedule of Net Position by Fund (Last Ten Years) .....................................................................48
Schedule of Power System Revenues and Expenses (Last Ten Years) .........................................49
Schedule of Water System Revenues and Expenses (Last Ten Years) .........................................50
Schedule of Wastewater System Revenues and Expenses (Last Two Years) ..............................51
Schedule of Broadband Revenues and Expenses (Last Ten Years) ..............................................52
Schedule of Purchased Power, Consumption and Active Service Statistics (Last Ten Years) .....53
Schedule of Water Production, Consumption and Active Service Statistics (Last Ten Years) .....54
Schedule of Wastewater Treated, Consumption and Active Service Statistics
(Last Two Years) ......................................................................................................................55
Schedule of Broadband Active Service Statistics (Last Ten Years) ..............................................56
Schedule of Outstanding Long-Term Debt by Type (Last Ten Years) .........................................57
Schedule of Water System Revenue Note Coverage (Last Ten Years) .........................................58
Schedule of Wastewater System Revenue Note Coverage (Last Two Years) ..............................59
Schedule of Property, Casualty and Other Insurance ....................................................................60
Schedule of Electric Rates (Last Ten Years) .................................................................................61
Schedule of Water Rates (Last Ten Years) ....................................................................................63
Schedule of Wastewater Rates (Last Two Years) .........................................................................65
Schedule of Monthly Broadband Rates (Last Ten Years) .............................................................66
Schedule of Power System Principal Customers (Current Year and Nine Years Prior) ...............67
Schedule of Water System Principal Customers (Current Year and Nine Years Prior) ................68
Schedule of Wastewater System Principal Customers (Current Year) .........................................69
Schedule of Employees by System (Last Ten Years) ....................................................................70
Water Audit Report for Morristown Utilities Commission ...........................................................71
Morristown Utilities Commission
Annual Financial Report
Year ended June 30, 2015
Other Section
Schedule of Expenditures of Federal Awards ................................................................................72
Report of Independent Auditors on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of the Financial Statements
Performed in Accordance with Government Auditing Standards................................................73
Report of Independent Auditors on Compliance for Each Major Program and on
Internal Control Over Compliance Required by OMB Circular A-133 ......................................75
Schedule of Findings and Questioned Costs ..................................................................................77
Report of Independent Auditors
Board of Commissioners
Morristown Utilities Commission
Report on the Financial Statements
We have audited the accompanying financial statements of the Power System, Water System,
Wastewater System and Broadband System (collectively, the Systems), enterprise funds of the
City of Morristown, Tennessee (the City), as of and for the year ended June 30, 2015, and the
related notes to the financial statements, which collectively comprise the Systems’ financial
statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due
to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the System’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the System’s internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of significant accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
1
Board of Commissioners
Morristown Utilities Commission
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the Power System, Water System, Wastewater System and
Broadband System of the City as of June 30, 2015, and the respective changes in net position and
cash flows thereof for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the Systems and do not purport to,
and do not, present fairly the financial position of the City as of June 30, 2015, the changes in its
financial position, or, where applicable, its cash flows for the year then ended in accordance with
accounting principles generally accepted in the United States of America. Our opinion is not
modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 4 through 7 and the schedule of funding progress
on page 40 and the schedule of employer contributions on page 41 for Morristown Utilities Retiree
Benefit Plan be presented to supplement the basic financial statements. Such information, although
not a part of the basic financial statements, is required by the Governmental Accounting Standards
Board, who considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic or historical context. We have applied certain
limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with managements’ responses to our inquiries, the basic financial statements and other
knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information, because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Systems’ basic financial statements. The Schedules of Long-Term Debt
Principal and Interest Requirements and statistical section are presented for the purpose of
additional analysis and are not a required part of the basic financial statements. The Schedule of
Expenditures of Federal Awards and State Financial Assistance is presented for purposes of
additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits
of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the
basic financial statements.
2
Board of Commissioners
Morristown Utilities Commission
Other Matters (continued)
Other Information (continued)
The Schedule of Expenditures of Federal Awards and State Financial Assistance and the Schedules
of Long-Term Debt Principal and Interest Requirements are the responsibility of management and
were derived from and relate directly to the underlying accounting and other records used to
prepare the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and
other records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal
Awards and State Financial Assistance and the Schedules of Long-term Debt Principal and Interest
Requirements are fairly stated in all material respects in relation to the basic financial statements
as a whole.
The statistical section has not been subjected to the auditing procedures applied in the audit of the
basic financial statements and, accordingly, we do not express an opinion or provide any assurance
on it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 1, 2015, on our consideration of the Systems’ internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in
considering the Systems’ internal control over financial reporting and compliance.
Coulter & Justus, P.C.
December 1, 2015
Knoxville, Tennessee
3
Morristown Utilities Commission
Management’s Discussion and Analysis
June 30, 2015
This discussion and analysis is intended to be an introduction to the financial statements and notes
that follow this section and should be read in conjunction with them. This section will provide
narrative discussion and analysis of the financial activities of Morristown Utilities Commission
(we, the Commission, or MUC). The Commission is responsible for the operation of four major
funds of the City of Morristown, Tennessee. These funds are the Power System, the Water System,
the Wastewater System and the Broadband System. This discussion and analysis is reported at the
Commission level. The financial performance of the Commission is discussed and analyzed within
the context of the accompanying financial statements and disclosures following this section.
Financial Statement Overview
The Balance Sheet includes the assets and liabilities of MUC that represent the available resources
and required obligations, with the difference reported as net position. The change in net position
is a potential indicator of the improving or deteriorating financial position of MUC. The change in
net position is a function of the revenues and expenses, which are recorded in the Statement of
Revenues, Expenses, and Changes in Net Position. Revenues are recorded as they are earned and
expenses are recorded when incurred (regardless of cash requirements). Cash activity for the
period is presented in the Statement of Cash Flows and the activity is segmented between
operating, investing, and financing activities. In addition, the Notes to the Financial Statements
offer additional information to provide a full understanding of the financial activity and position
of MUC.
The Commission is an administrative unit of the City of Morristown, Tennessee (the City) operated
under the general supervision and control of a five-member Board of Commissioners. The
Commission issues an annual financial report which is incorporated in the City’s comprehensive
annual financial report.
4
Morristown Utilities Commission
Management’s Discussion and Analysis (continued)
Financial Position
The primary indicator of financial position is net position. The net position of the Power System
decreased by $197,681, and the net position of the Water System, Wastewater and Broadband
System increased by $520,744, $2,925,106 and $1,336,850, respectively, as a result of operations
discussed later. This overall increase has primarily been used to acquire additional capital assets
in the current year.
Table 1
Morristown Utilities
Commission
Condensed Balance Sheets
June 30, 2015
June 30, 2014
Assets:
Current and other assets
Net capital assets
Total assets
Liabilities:
Current liabilities
Non-current liabilities
Total liabilities
Net position:
Net investments in capital assets
Unrestricted
Total net position
5
$ 57,443,801
190,727,280
248,171,081
$ 61,309,668
170,609,016
231,918,684
24,791,246
109,585,965
134,377,211
23,204,947
99,504,886
122,709,833
97,838,424
15,955,446
$ 113,793,870
88,619,889
20,588,962
$ 109,208,851
Morristown Utilities Commission
Management’s Discussion and Analysis (continued)
Results of Operations
As indicated in Table 2, operating revenues of the Commission increased by $528,900 or 0.49%
from fiscal year 2014 to 2015.
Table 2
Morristown Utilities Commission
Condensed Statement of Revenues,
Expenses and Changes in Net
Position
Year ended June 30
2015
2014
Revenues:
Operating revenues
Non-operating revenues
Total revenues
Expenses:
Purchased power
Other operating expenses
Interest expense and financing costs
Total expenses
Income before contributions and transfers
TVA load control reimbursement
Contributions
Transfers to the City
Changes in net position
Beginning net position
Ending net position
$107,566,055
54,998
107,621,053
$107,037,155
202,951
107,240,106
62,677,604
37,003,958
1,937,011
101,618,573
6,002,480
–
151,200
(1,568,661)
4,585,019
109,208,851
$113,793,870
62,661,481
35,413,485
1,793,623
99,868,589
7,371,517
331,552
192,734
(1,428,337)
6,467,466
102,741,385
$109,208,851
Assets
The Power System completed construction on the Roe Junction substation and began preparations
for the rebuilding of the Parkway substation.
The Broadband System continued the implementation of the new voice switch. This will allow
MUC to independently offer telephone service to the residents of the City of Morristown and
Hamblen County. The phone switch will be brought online later during calendar year 2015 at
which customers will be migrated from Windstream, MUC’s current phone provider, to the new
switch. The new phone switch will provide customers with a quality phone service that is managed
locally.
The Wastewater System continued ongoing construction projects to upgrade and enhance the
infrastructure of the wastewater plant, sewer lines and pumping stations.
6
Morristown Utilities Commission
Management’s Discussion and Analysis (continued)
Debt
During fiscal year 2015, there were no new debt instruments issued. The Wastewater System
continues to make draws ($14,478,032) on loans to fund improvements related to our Tennessee
Department of Environment and Conservation (TDEC) compliance order. The Power System drew
an additional $1,477,707 on the available balance of the $7,000,000 loan to fund the construction
of new electrical substations. Additional information on the Commission’s long-term debt can be
found in the notes to the financial statements included in this annual financial report.
Requests for Information
This financial report is designed to provide a general overview of the Commission’s finances for
all those with an interest in the Commission’s finances. Questions concerning any of the
information provided in this report or requests for additional financial information should be
directed to the Assistant General Manager, P.O. Box 667, Morristown, Tennessee 37815.
7
Morristown Utilities Commission
Balance Sheet
Year ended June 30, 2015
Power
System
Assets
Current assets:
Cash and cash equivalents
Accounts receivable:
Trade, net of allowance for doubtful
accounts of $246,582
Due from other funds
Due from others
Accrual for unbilled revenue
Other current assets
Materials and supplies inventories
Total current assets
$
10,561,369
Construction in progress
Net capital assets
Due from other funds
Plant acquisition adjustments, net of
accumulated amortization
Other assets
Total assets
$
$
Wastewater
System
3,678,398
$
Broadband
System
4,494,052
$
1,648,939
8,513,151
933,942
1,746,463
995,542
22,750,467
57,679
2,340
212,735
11,150
394,497
4,356,799
46,207
90,749
605,338
13,228
154,687
5,404,261
1,928
118,109
1,768,976
-
2,913,243
13,422,259
215,838
106,363,996
46,864,902
59,499,094
2,417,780
61,916,874
65,538,413
26,872,658
38,665,755
379,524
39,045,279
114,439,629
45,624,748
68,814,881
13,762,533
82,577,414
12,637,518
5,458,361
7,179,157
8,556
7,187,713
6,044,728
-
-
-
309,367
253,854
-
4,009
-
Restricted assets:
Cash and cash equivalents
Capital assets:
Plant and equipment in service
Less accumulated depreciation
Water
System
91,275,290
8
$
46,315,321
$
101,407,943
$
9,172,527
Morristown Utilities Commission
Balance Sheet (continued)
Year ended June 30, 2015
Power
System
Liabilities and net position
Current liabilities:
Accounts payable:
Trade
Due to other funds
City of Morristown
Unearned revenues
Customer deposits
Accrued payroll related liabilities
Other accrued liabilities
Current portion of capital lease obligation
Current portion of contractual obligation
Current portion of long-term debt
Total current liabilities
$
6,971,369
64,978
214,337
3,798,538
1,591,655
223,989
65,145
1,111,912
14,041,923
Water
System
$
206,446
483,975
22,508
880,885
1,593,814
Wastewater
System
$
2,948,620
38,908
156,602
363,830
85,382
3,661,482
7,254,824
Broadband
System
$
487,345
611,931
206,092
81,800
144,287
119,282
18,877
231,071
1,900,685
Accrued post retirement benefit obligation
Due to other funds
Capital lease obligation, less current portion
Contractual obligation, less current portion
Long-term debt, less current portion
Total liabilities
473,633
130,292
18,012,386
32,658,234
97,439
12,671,803
14,363,056
21,778
2,319,869
65,081,437
74,677,908
174,877
5,432,797
42,296
5,127,358
12,678,013
Net position:
Net investment in capital assets
Unrestricted
Total net position
42,597,139
16,019,917
58,617,056
28,405,834
3,546,431
31,952,265
24,851,503
1,878,532
26,730,035
1,983,948
(5,489,434)
(3,505,486)
Total liabilities and net position
$
91,275,290
See accompanying Notes to Financial Statements.
9
$
46,315,321
$
101,407,943
$ 9,172,527
Morristown Utilities Commission
Statement of Revenues, Expenses and Changes in Net Position
Year ended June 30, 2015
Power
System
Operating revenues:
Metered sales
Broadband sales
Interfund services provided
Other operating revenues
Total operating revenues
$
Operating expenses:
Power purchased
Operations
Maintenance
Interfund services used
Depreciation and amortization
Taxes
Total operating expenses
Operating income
Other income (expense):
Interest income
Financing cost
Interest expense
Net other expense
Income before contributions
and transfers
Water
System
75,151,759 $
1,316,523
1,434,066
77,902,348
6,411,681 $
440,519
32,807
6,885,007
62,677,604
5,398,839
2,482,834
1,110,884
4,789,812
335,900
76,795,873
1,106,475
3,531,335
560,833
319,130
1,609,492
6,020,790
864,217
Wastewater
System
12,247,129 $
808,636
13,055,765
3,996,423
847,905
442,608
3,276,479
8,563,415
4,492,350
6,394,851
302,856
1,057,220
482,532
64,025
8,301,484
1,421,451
8,189
(415,342)
(407,153)
21,397
(90,206)
(1,174,281)
(1,243,090)
959,306
457,064
3,249,260
1,336,850
-
99,800
51,400
-
(1,156,987)
(197,681)
Net position at beginning of year
58,814,737
31,431,521
23,804,929
58,617,056 $
31,952,265 $
26,730,035
$
8,239,118
1,172,800
311,017
9,722,935
23,640
(94,697)
(76,112)
(147,169)
Contributions
Transfers out (tax equivalent payments
to City of Morristown)
Changes in net position
Net position at end of year
Broadband
System
See accompanying Notes to Financial Statements.
10
(36,120)
520,744
1,772
(28,620)
(57,753)
(84,601)
(375,554)
2,925,106
1,336,850
(4,842,336)
$
(3,505,486)
Morristown Utilities Commission
Statement of Cash Flows
Year ended June 30, 2015
Power
System
Cash flows from operating activities
Cash received from customers
Cash received from City of Morristown, Tennessee
Cash paid to suppliers and vendors
Cash paid to employees for services
Net cash flows from operating activities
$
Cash flows from noncapital financing activities
Transfers to City of Morristown (tax equivalent payments)
75,549,153 $ 6,869,105 $
1,458,310
(65,958,810)
(2,672,642)
(5,515,576)
(1,514,490)
5,533,077
2,681,973
(1,156,987)
Cash flows from investing activities
Sale of investments
Interest received on cash and cash equivalents
Net cash flows from investing activities
Water
System
23,640
23,640
(36,120)
8,189
8,189
Wastewater
System
Broadband
System
12,997,772 $ 9,678,067
(33,753)
(4,318,254)
(6,653,474)
(810,078)
(1,188,301)
7,835,687
1,836,292
(375,554)
7,177,503
21,397
7,198,900
-
1,772
1,772
Cash flows from capital and related financing activities
Principal payments on capital lease obligation
Net additions to capital assets
Net interfund advances (repayments)
Contributions
Principal payments on long-term debt and
contractual obligation
Interest paid on long-term debt
Financing costs paid on long-term debt
Proceeds from long-term borrowings
Net cash flows from capital and related financing activities
(6,396,058)
(80,763)
-
(2,312,964)
141,393
99,800
(20,453,438)
36,141
51,400
(15,310)
(501,927)
(96,770)
-
(883,597)
(76,112)
(94,697)
1,477,707
(6,053,520)
(856,783)
(415,342)
(3,343,896)
(3,496,621)
(1,174,280)
(90,206)
14,478,032
(10,648,972)
(124,947)
(57,753)
(28,620)
(825,327)
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(1,653,790)
(689,854)
12,215,159
7,281,495
10,561,369 $ 6,591,641 $
$
11
4,010,061
13,906,250
17,916,311
1,012,737
852,040
$ 1,864,777
Morristown Utilities Commission
Statement of Cash Flows (continued)
Year ended June 30, 2015
Power
System
Reconciliation of operating income to net cash
flows from operating activities
Operating income
Adjustments to reconcile operating income to net cash
flows from operating activities:
Depreciation and amortization
Changes in operating assets and liabilities:
Accounts receivable
Accrual for unbilled/unearned revenue
Materials and supplies inventories
Other assets
Trade accounts payable
Customer deposits and prepayments
Other liabilities
Net cash flows from operating activities
$
Noncash disclosure:
Acquisition of capital assets
$
$
1,106,475
Water
System
$
5,063,361
See accompanying Notes to Financial Statements.
12
864,217
Wastewater
System
$
1,685,800
$
10,348
$
3,354,069
(61,025)
341
(175,589)
(16,243)
(52,845)
63,935
(719,911)
1,639
96,446
60,840
131,696
144,469
21,444
5,533,077 $ 2,681,973 $
261,097
4,492,350
Broadband
System
$
526,614
(46,108)
(14,102)
(11,885)
(64,187)
125,550
7,835,687 $
587,852
1,421,451
$
282
23,637
(31,553)
(128,019)
2,500
21,380
1,836,292
136,594
Morristown Utilities Commission
Notes to Financial Statements
June 30, 2015
1. Significant Accounting Policies
General
The Morristown Utilities Commission (the Commission) is an administrative unit of the City of
Morristown, Tennessee (the City). The Commission is comprised of the Power System, Water
System, Wastewater System and Broadband System (the Systems), which are reported as separate
enterprise funds of the City.
An enterprise fund is used to account for the financing of services to the general public on a
continuing basis with costs recovered primarily through user charges. The Commission is managed
and controlled by commissioners who are appointed for five year terms by the mayor and aldermen
of the City. The Commission manages, operates and maintains the power, water, wastewater and
broadband systems servicing the citizens of the City and surrounding areas. The Commission
issues an annual financial report which is combined with other funds in the City’s comprehensive
annual financial report.
The financial statements are presented on the accrual basis of accounting in conformity with
accounting principles generally accepted in the United States of America and general practices in
the power, water, wastewater and broadband industries. Operating revenues and expenses
generally result from providing power, water, wastewater and broadband services in connection
with the Systems’ ongoing operations. Operating expenses include the cost of personnel and
contractual services, supplies and depreciation on capital assets. All revenues and expenses not
meeting this definition are reported as non-operating revenues and expenses.
Net position is classified into the following three components, as applicable:



Net investment in capital assets – This component of net position consists of capital assets,
net of accumulated depreciation, reduced by the outstanding balances of any bonds,
mortgages, notes or other borrowings that are attributable to the acquisition, construction
or improvement of those assets. If there are significant unspent related debt proceeds or
deferred inflows of resources at year-end, the portion of the debt or deferred inflows of
resources attributable to the unspent proceeds is not included in the calculation of net
investment in capital assets. Rather, that portion of the debt or deferred inflows of resources
is included in the same net position component as the unspent proceeds.
Restricted – This component of net position consists of restricted assets reduced by
liabilities and deferred inflows of resources related to those assets.
Unrestricted – This component of net position is the net amount of the assets, deferred
outflows or resources, liabilities and deferred inflows of resources that are not included in
the determination of net investment in capital assets or the restricted components of net
position.
13
Morristown Utilities Commission
Notes to Financial Statements (continued)
1. Significant Accounting Policies (continued)
Measurement Focus
The accounting and financial reporting treatment applied to a fund is determined by its
measurement focus. The Systems’ operations are accounted for on a flow of economic resources
measurement focus. With this measurement focus, all assets and all liabilities associated with the
operation of the enterprise funds are included in the balance sheet. Fund equity (i.e. total net
position) consists of capital contributed by the City and retained earnings. Operating statements
present increases (e.g. revenues) and decreases (e.g. expenses) in total net position.
Fiscal Year-End
The Systems operate on a fiscal year ending June 30. All references in these notes refer to the
fiscal year-end unless otherwise specified.
Deposits and Investments
The Systems consider all demand deposits, non-negotiable certificates of deposit and short-term,
highly liquid investments with a maturity of three months or less when purchased to be cash
equivalents.
The Systems have not formally adopted an investment policy and place no limit on the amount
that may be deposited with any one issuer.
The Systems have no formal policy regarding interest rate risk. Deposits are structured in a manner
that ensures sufficient cash is available to meet anticipated liquidity needs. Selection of deposit
maturities must be consistent with the cash requirements of the Systems in order to avoid the forced
redemption of deposits prior to maturity.
As authorized by statutes of the State of Tennessee (the State), the Systems may only invest in
obligations of the United States Treasury, its agencies and instrumentalities; money market funds;
the Local Government Investment Pool or in obligations which are rated in either of the two highest
rated categories by a nationally recognized rating agency. As of June 30, 2015, all of the Systems
investments were rated in the two highest categories.
Restricted Assets
Restricted assets include funds limited by bond indentures for construction projects. When both
restricted and unrestricted resources are available for use, it is the System’s policy to use restricted
resources first, then unrestricted resources as they are needed.
14
Morristown Utilities Commission
Notes to Financial Statements (continued)
1. Significant Accounting Policies (continued)
Material and Supplies Inventories
Materials and supplies inventories are valued at the lower of cost or market, utilizing the moving
average method of determining cost.
Income Taxes
The Power, Water and Wastewater Systems are exempt from federal and state income taxes;
accordingly, no provision for income taxes has been recorded in the accompanying financial
statements. The Broadband System is exempt from federal income taxes; however, it is required
by Tennessee Code Annotated Section 7-52-606 to pay franchise and excise tax to the State of
Tennessee.
Capital Assets
Capital assets are carried at historical cost, including applicable general and administrative costs
and payroll related costs such as pensions, taxes and other employee benefits. All material
renewals and betterments are capitalized in accordance with the Systems’ capitalization policy.
Interest incurred during the construction phase of capital assets is included as part of the capitalized
value of the assets constructed, if material. Capitalized interest in the Wastewater System
amounted to approximately $320,000 in 2015. When property is retired or otherwise disposed of,
its average cost, together with its cost of removal less salvage, is charged to accumulated
depreciation and no gain or loss is recognized.
Capital assets, excluding land and construction in progress, are depreciated using the straight-line
method over the estimated useful lives of the assets, which are as follows:
Transmission equipment, fixtures and devices
Distribution transformers, meters, fixtures and devices
Buildings and improvements
Furniture, fixtures and equipment
25 to 50 years
5 to 50 years
50 years
5 to 25 years
Plant Acquisition Adjustments
Plant acquisition adjustments represent the excess of cost over net book value of utilities properties
acquired from other utilities districts. Such excess is amortized over the estimated useful life of
the related property (periods of up to 20 years).
15
Morristown Utilities Commission
Notes to Financial Statements (continued)
1. Significant Accounting Policies (continued)
Compensated Absences
The Systems recognize the cost of vacation pay and sick leave benefits when earned by the
employees. In the event of termination or retirement, an employee is reimbursed for accumulated
vacation days. In general, accumulated vacation days are limited to thirty days. Employees are
reimbursed for accumulated sick leave upon retirement or termination at an equivalent salary rate
of 100%, 50% or 33-l/3%, depending on the date earned. Sick leave accumulation is limited to
ninety days.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual results could differ from
those estimates.
Interest on Indebtedness
Interest is charged to expense, as incurred, except for interest related to borrowings used for
construction projects which is capitalized. Interest in the amount of $320,042 was capitalized
during 2015.
Subsequent Events
In preparation of the accompanying financial statements, management has evaluated events and
transactions that have occurred since the balance sheet date through December 1, 2015, the date
these financial statements were available for issuance.
Subsequent Pronouncements
In February 2015, the GASB issued Statement No. 72 (Statement No. 72), Fair Value
Measurement and Application. Statement No. 72 is intended to provide guidance for determining
a fair value measurement for financial reporting purposes and for applying fair value to certain
investments and disclosures related to all fair value measurements. In June 2015, the GASB issued
GASB Statement No. 73 (Statement No. 73), Accounting and Financial Reporting for Pensions
and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to
Certain Provision of GASB Statements 67 and 68. The requirements of this Statement will improve
financial reporting by establishing a single framework for the presentation of information about
pensions and enhance comparability. Statements No. 72 and 73 are effective for fiscal years
beginning after June 15, 2015.
16
Morristown Utilities Commission
Notes to Financial Statements (continued)
1. Significant Accounting Policies (continued)
Subsequent Pronouncements (continued)
In June 2015, the GASB issued two related Statements that affect accounting and financial
reporting by state and local governments for postemployment benefits other than pensions
(OPEB). GASB Statement No. 74 (Statement No. 74), Financial Reporting for Postemployment
Benefit Plans Other Than Pension Plans, addresses reporting by OPEB plans that administer
benefits on behalf of governments. GASB Statement No. 75 (Statement No. 75), Accounting and
Financial Reporting for Postemployment Benefits Other Than Pensions, addresses reporting by
governments that provide OPEB to their employees. Statement No. 74 is effective for fiscal years
beginning after June 15, 2016, and Statement No. 75 is effective for fiscal years beginning after
June 15, 2017.
The Commission has not elected early implementation of these standards and has not completed
the process of evaluating the impact of these statements on its financial statements.
2. Deposits and Investments
Deposits, which are included in the accompanying financial statements as cash and cash
equivalents, are as follows as of June 30, 2015:
Power System
Water System
Wastewater System
Broadband System
$ 10,561,369
6,591,641
17,916,311
1,864,777
All of the Systems’ deposits, as of June 30, 2015, are covered by the bank collateral pool
administered by the State Treasurer. Banks participating in the pool report the aggregate balance
of their public fund accounts to the State. Collateral to secure these deposits must be pledged to
the State Treasurer on behalf of the bank collateral pool. The securities pledged to protect these
accounts are pledged in aggregate rather than against each individual account. Public fund
accounts covered by the pool are considered entirely insured or collateralized.
As of June 30, 2015, the Water System and Broadband System have restricted cash and cash
equivalents totaling $2,913,243, $13,422,259 and $215,838 respectively. The restricted assets
consist of construction retainage in escrow and unspent bond proceeds described in Note 6.
3. Power Contract
The Power System has a power contract with the Tennessee Valley Authority (TVA) whereby the
Power System purchases all of its electric power from TVA and is subject to certain restrictions
and conditions as provided in the contract.
17
Morristown Utilities Commission
Notes to Financial Statements (continued)
4. Retirement Plan
The Systems share in a defined contribution retirement plan, Morristown Utilities Commission
Employee Retirement Plan (the Plan), covering substantially all employees. The Commission is
the administrator of the Plan and is responsible for establishing or amending the Plan provisions
and contribution requirements.
System
Power
Water
Wastewater
Broadband
Total
Payroll
$ 5,600,093
$ 1,535,934
$ 829,596
$ 1,170,428
Covered
Payroll
$ 5,199,423
$ 1,508,741
$ 820,879
$ 1,061,845
Employer
Contributions
$772,936
$221,570
$122,646
$159,277
% of
Covered
Employee
Payroll Contributions
15%
15%
15%
15%
$ 328,484
$ 91,384
$ 60,439
$ 52,168
% of
Covered
Payroll
6%
6%
7%
5%
Under the Plan terms, the Systems will match participant contributions up to 3% of the
participant’s salary and may also contribute an additional amount to the Plan at its discretion.
During 2015, the discretionary contribution amounted to 12% of the participants’ salary.
Participants are not required but may contribute up to a total of 75% of their salary subject to IRS
limitations. All employees who have completed one year of service as defined by the Plan and who
have attained the age of 21 are eligible to participate in the Plan. Participants are 100% vested in
the employer contributions when they are made.
18
Morristown Utilities Commission
Notes to Financial Statements (continued)
5. Capital Assets
The following is a schedule of changes in major classes of the Power System plant and equipment:
Balance
July 1, 2014
Capital assets not being depreciated:
Land
$ 871,832
Construction in progress
924,454
Total capital assets not being
depreciated
1,796,286
Capital assets being depreciated:
Transmission equipment, fixtures
and devices
8,660,682
Distribution transformers,
meters, fixtures and devices
55,051,929
Buildings and improvements
5,565,832
Furniture, fixtures and equipment 33,873,501
Total capital assets being
depreciated
103,151,944
Less accumulated depreciation:
Transmission equipment, fixtures
and devices
5,354,960
Distribution transformers, meters
fixtures and devices
21,786,333
Buildings and improvements
1,637,549
Furniture, fixtures and equipment 15,934,138
Total accumulated depreciation
44,712,980
Net capital assets being depreciated 58,438,964
Net capital assets
$60,235,250
19
Increases/
TransfersIn
$
–
6,654,126
Decreases/
TransfersBalance
Out
June 30, 2015
$
–
5,160,800
$
871,832
2,417,780
6,654,126
5,160,800
3,289,612
2,550
–
8,663,232
2,854,076
159,313
2,049,328
391,106
–
2,333,941
57,514,899
5,725,145
33,588,888
5,065,267
2,725,047
105,492,164
236,896
–
5,591,856
2,030,266
103,511
2,604,859
4,975,532
89,735
$6,743,861
505,481
–
2,318,129
2,823,610
(98,563)
$ 5,062,237
23,311,118
1,741,060
16,220,868
46,864,902
58,627,262
$61,916,874
Morristown Utilities Commission
Notes to Financial Statements (continued)
5. Capital Assets (continued)
The following is a schedule of changes in major classes of the Water System plant and equipment:
Capital assets not being
depreciated:
Land
Construction in progress
Total capital assets not being
depreciated
Capital assets being depreciated:
Transmission equipment, fixtures
and devices
Distribution meters, fixtures and
devices
Buildings and improvements
Furniture, fixtures and equipment
Total capital assets being
depreciated
Less accumulated depreciation:
Transmission equipment, fixtures
and devices
Distribution meters, fixtures and
devices
Buildings and improvements
Furniture, fixtures and equipment
Total accumulated depreciation
Net capital assets being depreciated
Net capital assets
Balance
July 1, 2014
Increases/
TransfersIn
$
401,750
300,741
$
–
2,326,965
702,491
2,326,965
2,249,332
780,124
7,522,284
308,011
–
7,830,295
39,022,686
14,649,928
1,719,364
452,082
1,113,353
357,898
7,793
–
–
39,466,975
15,763,281
2,077,262
62,914,262
2,231,344
7,793
65,137,813
4,021,014
197,563
–
4,218,577
14,843,979
4,721,779
1,622,214
25,208,986
37,705,276
986,441
366,315
135,480
1,685,799
545,545
$38,407,767
$2,872,510
20
Decreases/
TransfersOut
$
1,150
2,248,182
22,127
–
–
22,127
(14,334)
$ 2,234,998
Balance
June 30, 2015
$
400,600
379,524
15,808,293
5,088,094
1,757,694
26,872,658
38,265,155
$ 39,045,279
Morristown Utilities Commission
Notes to Financial Statements (continued)
5. Capital Assets (continued)
The following is a schedule of changes in major classes of the Wastewater System plant and
equipment:
Balance
July 1, 2014
Capital assets not being
depreciated:
Land
Construction in progress
Total capital assets not being
depreciated
Decreases/
TransfersBalance
Out
June 30, 2015
$ 1,195,234 $
– $
–
5,283,314 20,571,554 12,092,335
6,478,548
$ 1,195,234
13,762,533
20,571,554
12,092,335
14,957,767
706,175
–
68,878,195
10,420,945
2,011
35,889,946
411,797
–
4,566,476
1,025,168
–
3,909,778
12,564,085
2,011
113,244,395
1,722,978
–
25,226,484
660,207
–
17,268,584
715,860
–
907,674
255,027
3,354,072
–
–
2,222,006
45,624,748
9,210,013
2,011
67,619,647
$ 64,890,193 $29,781,567 $12,094,346
$82,577,414
Capital assets being
depreciated:
Collection facilities, fixtures
and devices
68,172,020
Treatment facilities, fixtures
and devices
25,471,012
Pumping facilities, fixtures
and devices
4,154,679
General facilities, fixtures and
devices
2,884,610
Total capital assets being
depreciated
100,682,321
Less accumulated depreciation:
Collection facilities, fixtures
and devices
23,503,506
Treatment facilities, fixtures
and devices
16,608,377
Pumping facilities, fixtures
and devices
191,814
General facilities, fixtures and
devices
1,966,979
Total accumulated depreciation
42,270,676
Net capital assets being
depreciated
58,411,645
Net capital assets
Increases/
TransfersIn
21
Morristown Utilities Commission
Notes to Financial Statements (continued)
5. Capital Assets (continued)
The following is a schedule of changes in major classes of the Broadband System plant and
equipment:
Balance
July 1, 2014
Capital assets not being
depreciated-construction in
progress
Capital assets being depreciated:
Transmission equipment, fixtures
and devices
Distribution fixtures and devices
Furniture, fixtures and equipment
Total capital assets being
depreciated
Less accumulated depreciation:
Transmission equipment, fixtures
and devices
Distribution fixtures and devices
Furniture, fixtures and equipment
Total accumulated depreciation
Net capital assets being depreciated
Net capital assets
Increases/
TransfersIn
Decreases/
TransfersBalance
Out
June 30, 2015
$ 578,740
$ 662,157
$1,232,341
$
8,556
4,331,193
6,661,551
840,439
114,954
1,120,525
2,976
289,261
144,859
–
4,156,886
7,637,217
843,415
11,833,183
1,238,455
434,120
12,637,518
1,071,765
3,505,339
759,013
5,336,117
6,497,066
179,315
273,761
73,532
526,608
711,847
$7,075,806
$1,374,004
283,173
121,191
–
404,364
29,756
967,907
3,657,909
832,545
5,458,361
7,179,157
$1,262,097
$7,187,713
In August 2015, the Commission entered into an agreement to purchase an office building from a
third party for approximately $975,000.
The provision for depreciation does not include depreciation on transportation equipment. Those
amounts are reported as operations expenses in the Statements of Revenues, Expenses and
Changes in Net Position. The cost of maintenance and repairs is charged to expense as incurred.
The following represents the depreciation on transportation equipment not included in depreciation
expense previously noted:
Power
System
Water
System
Broadband
System
Wastewater
System
$273,549
$76,308
$44,082
$77,590
22
Morristown Utilities Commission
Notes to Financial Statements (continued)
6. Long-Term Liabilities
The following is a summary of long-term liabilities:
Balance
July 1, 2014
Power System:
2003 Promissory Note
2008 Promissory Note
2013 Promissory Note
Cooperative Notes, non-interest
bearing, due in annual
installments ranging from
$79,983 in 2016 to $43,974
in 2020
Less current portion
Long-term portion
Water System:
2009 Promissory Note
2002 DWSRF Promissory Note
2011 DWSRF Promissory Note
Less current portion
Long-term portion
Additions
Balance
Retirements June 30, 2015
–
–
1,477,707
$ 250,000
385,053
364,000
394,089
–
79,981
314,108
18,725,625
1,079,036
$ 17,646,589
$ 1,477,707
$1,079,034
19,124,298
1,111,912
$ 18,012,386
$ 6,385,000
6,916,319
1,108,152
14,409,471
856,784
$ 13,552,687
$
–
–
–
–
$ 305,000
503,880
47,903
$ 856,783
$ 6,080,000
6,412,439
1,060,249
13,552,688
880,885
$ 12,671,803
$ 1,000,000
13,816,624
3,514,912
23
$
$
$
750,000
13,431,571
4,628,619
Morristown Utilities Commission
Notes to Financial Statements (continued)
6. Long-Term Liabilities (continued)
Balance
July 1, 2014
Wastewater System:
2008 – 50518 Promissory Note
2008 – 50545 Promissory Note
2008 – 50532 Promissory Note
2008 – 50536 Promissory Note
2009 – Promissory Note
2007 CWSRF Promissory Note
2009 CWSRF Promissory Note
2013 CWSRF Promissory Note
General Obligation Bonds, Series
2012
2013 Promissory Note
Unamortized bond premium
Less current portion
Long-term portion
Broadband System:
2008 Promissory Note
Interfund loan from the Power
System
2014 Promissory Note
Less current portion
Long-term portion
$ 3,177,000
1,424,430
8,578,354
1,412,250
1,689,273
8,944,540
1,211,467
–
Additions
–
–
–
–
–
–
2,478,032
$ 162,000
66,120
437,743
71,750
59,514
426,444
51,624
–
$ 3,015,000
1,358,310
8,140,611
1,340,500
1,629,759
8,518,096
1,159,843
2,478,032
24,913,883
5,142,587
56,493,784
–
12,000,000
14,478,032
1,086,116
1,000,000
3,361,311
23,827,767
16,142,587
67,610,505
1,185,759
57,679,543
3,414,652
$54,264,891
–
$14,478,032
53,345
$3,414,656
1,132,414
68,742,919
3,661,482
$ 65,081,437
$ 4,483,376
$
–
$ 124,947
$ 4,358,429
$
–
–
–
96,770
–
$ 221,717
6,044,728
1,000,000
11,403,157
843,002
$ 10,560,155
6,141,498
1,000,000
11,624,874
699,442
$10,925,432
$
Balance
Retirements June 30, 2015
Power System
The Power System has a promissory note (2003 Promissory Note) with the City in the original
principal amount of $2,500,000. The note was issued to the Commission with proceeds from the
City’s loan agreement with the Public Building Authority of Sevier County Bonds. Principal is
payable in annual installments of $250,000 through 2018. Interest is payable quarterly at variable
rates for 30 day commercial paper with a AA bond rating as determined by Standard and Poor
(0.13% per annum as of June 30, 2015).
24
Morristown Utilities Commission
Notes to Financial Statements (continued)
6. Long-Term Liabilities (continued)
Power System (continued)
The City has an outstanding promissory note (2008 Promissory Note) with the Public Building
Authority of the City of Clarksville, Tennessee, at a variable interest rate as defined in the
agreement, payable in annual installments ranging between $535,000 and $1,360,000 through May
2035. The note provides for a variable interest rate, which is determined by the Remarketing Agent
for the securities. In its sole discretion, the Remarketing Agent resets the minimum rate of interest
that is necessary to remarket all of the outstanding bonds at par plus accrued interest if settled on
a non-interest payment date, based on market conditions. Many factors are considered when
determining the interest rates, and there is no standard formula used to determine them. The City
has allocated the responsibility of the 2008 Promissory Note between the Power System and the
Broadband System based upon their proportionate assets acquired with proceeds from the note.
The City has a loan agreement (2013 Promissory Note) with the Public Building Authority of the
City of Clarksville in a principal amount not to exceed $7,000,000 ($4,628,619 outstanding as of
June 30, 2015). Interest is payable monthly at variable rates (0.06% as of June 30, 2015) as
determined by the Trustee. Principal is payable annually in varying amounts ranging from
$378,000 in 2016 to $605,000 in 2028 (if fully drawn).
Periodically, the Power System acquires additional service areas from local electric cooperatives
servicing Hamblen County residents. As a result of the acquisitions of service areas, the Power
System pays the cooperatives a calculated fee (Cooperative Notes) over a ten-year period based
on lost revenues of the cooperatives.
During 2015, the Commission entered into an asset purchase agreement for the acquisition of a
software storage system. The agreement is non-interest bearing and provides for quarterly
payments of $16,286 through 2018 and is reflected as a contractual obligation in the accompanying
balance sheet.
25
Morristown Utilities Commission
Notes to Financial Statements (continued)
6. Long-Term Liabilities (continued)
Power System (continued)
Future debt service requirements of Power System long-term debt as of June 30, 2015, are as
follows:
Promissory Notes
Interest
Principal
2016
2017
2018
2019
2020
2021-2025
2026-2030
2031-2035
Total
$ 21,200
20,801
19,166
17,473
16,037
56,453
24,502
10,123
$185,755
$ 1,031,929
1,069,579
1,108,229
896,879
936,529
5,353,476
3,743,852
4,669,717
$18,810,190
Cooperative
Total
Notes
Requirements
$ 79,983
79,983
66,195
43,974
43,973
–
–
–
$314,108
$ 1,133,112
1,170,363
1,193,590
958,326
996,539
5,409,929
3,768,354
4,679,840
$ 19,310,053
Water System
The City has an outstanding loan agreement (2009 Promissory Note) with the Public Building
Authority of the City of Clarksville in the original principal amount of $7,500,000. Proceeds from
the loan agreement were used for various capital projects of the Water System. Interest is payable
quarterly at a fixed rate of 3.38%. Principal is payable in varying amounts from $315,000 in
December 2015 to $505,000 in December 2029.
The City has a revolving fund loan agreement (2002 DWSRF Promissory Note) with the State for
the repayment of a principal amount up to $10.5 million for the purpose of expanding an existing
water treatment facility of the Water System. The Water System drew a total of $10,492,582 before
closing out the project during 2007. Interest is payable monthly at an annual percentage rate of
2.61% on the outstanding balance. Principal is payable monthly in varying amounts from $43,099
in July 2015 to $55,815 in April 2026. The note is payable from revenues derived from the
operations of the Water System.
The City has a $2,000,000 promissory note (2011 DWSRF Promissory Note) between the
Tennessee Department of Environment and Conservation and the Tennessee Local Development
Authority to fund a remote-read water meter project. Of the proceeds, $800,000 was provided as
a grant via loan forgiveness through the State. Interest is payable monthly at an annual percentage
rate of 2.83% on the outstanding balance. Principal is payable monthly in varying amounts from
$4,053 in July 2015 to $6,382 in June 2032. The note is payable from revenues derived from
operations of the Water System.
26
Morristown Utilities Commission
Notes to Financial Statements (continued)
6. Long-Term Liabilities (continued)
Water System (continued)
The future debt service requirements on Water System long-term debt as of June 30, are as follows:
Interest
2016
2017
2018
2019
2020
2021-2025
2026-2030
2031-2035
Total
$ 390,764
364,804
338,022
310,489
282,196
955,275
260,159
4,536
$2,906,245
Principal
$
880,885
910,945
936,403
962,275
988,569
5,412,848
3,308,163
152,600
$13,552,688
Total
Requirements
$ 1,271,649
1,275,749
1,274,425
1,272,764
1,270,765
6,368,123
3,568,322
157,136
$ 16,458,933
Wastewater System
The City has an outstanding loan agreement (2008 - 50518 Promissory Note) with the Public
Building Authority of the City of Clarksville in the original principal amount of $8,000,000 of
which 50% is attributed to the Wastewater System. Proceeds from the loan agreement were used
for the construction and equipping of extensions and improvements to the Wastewater System and
refunding of prior debt. Interest is payable monthly at variable rates (0.06% as of June 30, 2015)
as determined by the Remarketing Agent. Principal is payable annually in varying amounts from
$170,500 in May 2016 to $305,500 in May 2028.
The City has an outstanding loan agreement (2008 - 50545 Promissory Note) with the Public
Building Authority of the City of Clarksville in the original principal amount of $3,000,000 of
which 57% is attributed to the Wastewater System. Proceeds from the loan agreement were used
for the installation of energy conservation measures and related upgrades to reduce energy costs
in public facilities. Interest is payable monthly at variable rates (0.06% as of June 30, 2015) as
determined by the Remarketing Agent. Principal is payable annually in varying amounts from
$68,970 in May 2016 to $130,530 in May 2029.
The City has an outstanding loan agreement (2008 - 50532 Promissory Note) with the Public
Building Authority of the County of Montgomery, Tennessee in the original principal amount of
$20,000,000 of which 53.98% is attributed to the Wastewater System. Proceeds from the loan
agreement were used for the purpose of prepaying outstanding indebtedness. Interest is payable
monthly at variable rates (0.06% as of June 30, 2015) as determined by the Remarketing Agent.
Principal is payable annually in varying amounts from $459,370 in May 2016 to $825,354 in May
2028.
27
Morristown Utilities Commission
Notes to Financial Statements (continued)
6. Long-Term Liabilities (continued)
Water System (continued)
The City has an outstanding loan agreement (2008 - 50536 Promissory Note) with the Public
Building Authority of the City of Clarksville in the original principal amount of $5,035,000 of
which 35% is attributed to the Wastewater System. Proceeds from the loan agreement were used
for the purpose of prepaying outstanding indebtedness. Interest is payable monthly at variable rates
(0.06% as of June 30, 2015) as determined by the Remarketing Agent. Principal is payable
annually in varying amounts from $75,250 in May 2016 to $136,500 in May 2028.
The City has an outstanding loan agreement (2009 - Promissory Note) between the Public Building
Authority of the City of Clarksville and First Tennessee Bank in the original principal amount of
$5,000,000 of which 38.15% is attributed to the Wastewater System. Proceeds from the loan
agreement were used for the purpose of prepaying outstanding indebtedness and construction,
extension, renovation and improvement of the Wastewater System, including the acquisition of
certain equipment. Interest is payable quarterly at a fixed rate of 2.91%. Principal is payable
annually in varying amounts from $61,040 in December 2015 to $105,676 in December 2034.
The City has a revolving fund loan agreement (2007 CWSRF Promissory Note) between the
Tennessee Department of Environment and Conservation and the Tennessee Local Development
Authority for the repayment of a principal amount up to $12,500,000 for the purpose of
rehabilitation and site work at the wastewater treatment plant. The City drew a total of $10,016,558
before closing out the project during 2012. Interest is payable monthly at an annual percentage rate
of 2.06% on the outstanding balance. Principal is payable monthly in varying amounts from
$36,276 in July 2015 to $50,476 in January 2032. The note is payable from revenues derived from
the operations of the System.
The City has a revolving fund loan agreement (2009 CWSRF Promissory Note) between the
Tennessee Department of Environment and Conservation and the Tennessee Local Development
for the repayment of a principal amount up to $1,600,000 for the purpose of rehabilitation and site
work at various pump stations. The City drew a total of $1,287,983 before closing out the project
during 2014. Interest is payable monthly at an annual percentage rate of 2.73% on the outstanding
balance. Principal is payable monthly in varying amounts from $4,421 in July 2015 to $7,102 in
October 2032. The note is payable from revenues derived from the operations of the System.
The City has a revolving fund loan agreement (2013 CWSRF Promissory Note) between the
Tennessee Department of Environment and Conservation and the Tennessee Local Development
Authority for the repayment of a principal amount up to $5,000,000 ($2,478,032 outstanding as of
June 30, 2015) for the purpose of rehabilitation and site work at the wastewater treatment plant.
Interest is payable monthly at an annual percentage rate of 1.51% on the outstanding balance.
Principal is also payable monthly in varying amounts from $4,421 in July 2015 to $7,102 in
October 2032. The note is payable from revenues derived from the operations of the System.
28
Morristown Utilities Commission
Notes to Financial Statements (continued)
6. Long-Term Liabilities (continued)
Wastewater System (continued)
During 2012, the City issued $31,000,000 of General Obligations Bonds, Series 2012, $26,000,000
of which relates to the Wastewater System. The bonds were issued for the purpose of financing
the cost of constructing, improving and extending the Wastewater System. The bonds consist of
serial maturities that mature in increasing amounts ranging from $1,086,117 in October 2015 to
$1,077,730 in October 2036. Interest is payable semi-annually at rates ranging from 3% to 4%.
The bonds are subject to redemption at the direction of the City prior to maturity. The bonds
maturing on October 1, 2022, and thereafter are subject to redemption as a whole or in part at any
time at the direction of the City. The bonds are payable from and secured by income and revenues
from the operation of the Wastewater System.
During 2014, the City entered into a loan agreement (2013 Promissory Note) with the Public
Building Authority of the City of Clarksville in the principal amount not to exceed $20,000,000
($16,142,587 outstanding as of June 30, 2015). Proceeds from the loan agreement were used for
the extension, construction, improvement and equipping the Wastewater System. Interest is
payable semiannually at a fixed rate of 3.65%. Principal of $1,000,000 is payable annually,
maturing September 2033.
Subsequent to June 30, 2015, the City entered into a $10,000,000 loan agreement with the Public
Building Authority of the City of Clarksville. Interest is payable semiannually at fixed rate of
2.74%. Principal is payable annually.
Bonds payable are reported net of the applicable premium.
The future debt service requirements on Wastewater long-term debt as of June 30, are as follows:
Bonds
Interest
Principal
2016
2017
2018
2019
2020
2021-2025
2026-2030
2031-2035
2036-2039
Total
$ 767,926 $ 1,086,117
735,343
1,086,117
702,759
1,086,117
670,176
1,086,117
637,592
1,086,117
2,693,779
5,430,583
1,700,108
5,422,196
794,152
5,388,648
73,151
2,155,755
$8,774,986 $23,827,767
29
Promissory Notes
Interest
Principal
$ 748,202
858,160
802,893
747,214
691,118
2,598,563
1,177,061
99,381
–
$ 7,722,592
$ 2,575,365
2,626,495
2,681,103
2,736,348
2,795,163
14,914,108
12,709,126
2,745,030
–
$43,782,738
Total
Requirements
$ 5,177,610
5,306,115
5,272,872
5,239,855
5,209,990
25,637,032
21,008,491
9,027,211
2,228,906
$84,108,083
Morristown Utilities Commission
Notes to Financial Statements (continued)
6. Long-Term Liabilities (continued)
Wastewater System (continued)
The Wastewater System has agreed to establish and revise rates such that revenues will be
sufficient to pay all costs of maintaining, operating, repairing and ensuring the Wastewater System
and the amounts necessary for the payment of principal and interest on the bonds.
During 2009, the City entered into an asset purchase agreement for the acquisition of a wastewater
treatment plant located in Hamblen County, Tennessee. The agreement provided for an initial
down payment of $750,000 plus ongoing Flow Fees generally ranging between $182,500
(minimum Flow Fee if annual volume fails to exceed the average of 500,000 gallons per day) and
$736,125 annually through 2034 depending on the volume of discharges. The City recorded the
acquisition (and related contractual obligation) at the estimated fair value of the wastewater
treatment plant. The obligation ($2,405,251 outstanding as of June 30, 2015) is payable monthly
at $15,208, which includes interest at the imputed rate of 4.10%. Flow Fees in excess of $15,208,
if any, will be charged to expense as incurred.
Broadband System
The Broadband System was allocated a portion of the 2008 Promissory Note (Power System)
based on the assets acquired from the proceeds of the note. In addition, the Broadband System has
an interfund note payable to the Power System, more fully described in Note 10.
During 2014, the City entered into a loan agreement (2014 - Promissory Note) with First Tennessee
Bank in the principal amount of $1,000,000. Proceeds from the loan agreement were used for the
purpose of purchase, installation integration and bringing into operational status a phone switch.
Interest is payable semi-annually at a fixed rate of 2.59%. Principal is payable annually in varying
amounts from $100,000 in June 2016 to $123,000 in June 2024.
Future debt service requirements on Broadband System long-term debt (including its interfund
note payable) as of June 30 are as follows:
Interest
2016
2017
2018
2019
2020
2021-2025
2026-2030
2031-2035
Total
$
42,078
37,782
33,370
28,871
24,286
51,642
7,875
3,285
$ 229,189
30
Principal
$
843,002
893,448
905,432
917,421
929,413
4,213,391
1,185,767
1,515,283
$11,403,157
Total
Requirements
$
885,080
931,230
938,802
946,292
953,699
4,265,033
1,193,642
1,518,568
$ 11,632,346
Morristown Utilities Commission
Notes to Financial Statements (continued)
7. Leases
The Broadband System leases certain equipment with an original cost of $98,112, under a capital
lease agreement expiring in 2019. Amortization of the asset is included with depreciation expense
in the accompanying financial statements. Accumulated amortization amounted to $36,289 as of
June 30, 2015.
Future minimum lease payments under the capital lease, together with the net present value of the
minimum lease payments, is as follows:
2016
2017
2018
2019
Total future minimum lease payments
Less amounts representing interest
Present value of future minimum lease payments
(including $18,877 classified as current)
$18,877
18,877
18,877
12,584
69,215
8,042
$61,173
8. Tennessee Valley Authority Home Insulation Program
The Power System participates in the TVA energy right® Residential Program which provides
interest-bearing loans to the Power System’s customers for energy-efficient equipment and other
weatherization measures. Under the program, the Power System collects payments on new and
previously existing loans and forwards payments to a financial institution pursuant to guidelines
established by TVA.
9. Concentration of Credit Risk
The Systems provide electric, water, wastewater and broadband services to customers in the City
and Hamblen County, Tennessee. Customers include residential, commercial and heavy industrial
users. Residential customers for the Power and Broadband Systems are required to place deposits
that approximate one month’s account balance. Loss experience has not been significant to the
Systems’ operations.
10. Related Party and Interfund Activities
As described in Note 1, the Commission is an administrative unit of the City. The Systems provide
electrical, water, wastewater and broadband service to the City, which generated revenues of
approximately $1,226,450 in 2015. The Water System also bills and collects sewer charges for the
City (until transferred) as well as stormwater and garbage fees. Administrative charges for these
services were approximately $230,600 in 2015. Payment is due within approximately 30 days of
the billing.
31
Morristown Utilities Commission
Notes to Financial Statements (continued)
10. Related Party and Interfund Activities (continued)
Interfund receivables and payables consist of the following as of June 30:
Power System
Due from Broadband System
Due to Water System
Due to Wastewater System
$ 6,044,728
(18,771)
(46,207)
$ 5,979,750
Water System
Due from Power System
Due from Wastewater System
$
$
Wastewater System
Due to Water System
Due from Power System
$
$
Broadband System
Due to Power System, (including
$611,931 classified as current)
18,771
38,908
57,679
(38,908)
46,207
7,299
$(6,044,728)
In accordance with Tennessee Code Annotated 7-52-603(b), a line of credit was executed allowing
the Broadband System to borrow up to $7,000,000 from the Power System at an interest rate equal
to the highest rate earned on Power System investments (.25% at June 30, 2015). Interest incurred
on the loan amounted to $16,563 in 2015. The agreement was approved by TVA as required by
the Power Contract and provides for the repayment of all advances along with accumulated interest
by January 2025.
The Power System allocates operating and maintenance costs to the Water and Broadband Systems
based upon its usage of fiber lines in the Power System and the number of customers.
32
Morristown Utilities Commission
Notes to Financial Statements (continued)
10. Related Party and Interfund Activities (continued)
Operating and maintenance costs allocated between the Systems based on these methods are
summarized as follows:
Power
Services
Services
Provided
Used
Rent
$ 181,890 $
–
Meter Costs
–
–
Phone
Answering
–
24,715
Fiber network
usage
1,134,633
–
Collector point
management
– 1,086,169
Total
$ 1,316,523 $ 1,110,884
Water
Services
Services
Provided
Used
$ 57,314
–
52,867
Broadband
Services
Services
Provided
Used
–
–
$ 36,865
387,652
–
–
18,091
–
10,061
–
175,185
–
–
–
959,448
–
$ 440,519
86,631
$319,130
1,172,800
$1,172,800
–
$1,057,220
$
–
387,652
Wastewater
Services Services
Provided
Used
$
$
–
–
–
$442,608
$
–
–
$
87,711
–
Fiber network usage includes pole attachment fees.
Other amounts reflected as due to/from other fund in the accompanying balance sheets represent
temporary operating cash advances between the Power, Water, Wastewater and Broadband
Systems.
The tax equivalent payments made to the City based on the Systems’ capital assets along with
average operating revenue, less power costs are $1,156,987 for the Power System, $36,120 for the
Water System and $375,554 for the Wastewater System.
11. Post-Employment Benefits
The Systems provide post-employment benefits (OPEB), in accordance with its employee benefits
plan, to all eligible retirees.
Current accounting guidance requires the recognition of liabilities for OPEB over the employment
of participants rather than as premiums are paid. The Power, Water, Wastewater and Broadband
Systems recognized $54,548, $16,493, $12,732 and $31,534, respectively, for these benefits in
2015.
The Systems’ OPEB is a single employer defined benefit plan and is not required to issue a separate
financial report.
33
Morristown Utilities Commission
Notes to Financial Statements (continued)
11. Post-Employment Benefits (continued)
Plan Description
The Systems provide medical, dental, and life insurance benefits to retirees. Employees who retire
at age 55 with 10 years of service or at age 65 with five years of service are eligible to participate.
The Systems pay the same monthly premium amount that is paid for active employees of the
retiree’s medical, dental and life insurance premiums.
In addition, the Systems pay the same monthly premium amount that is paid for active employees
of the retiree’s dependent’s medical premiums. The retiree’s spouse is also eligible for medical
benefits (same as retiree) as long as the retiree is eligible (there are no surviving spouse benefits).
The life insurance benefit available to retirees is $5,000. The average annual medical and dental
premium is $7,254 and $407, respectively.
Funding Policy
The Systems funds the Plan on a pay-as-you-go basis and do not intend to contribute in excess of
the annual premiums. The annual required contribution (ARC) is an actuarially determined amount
that represents a level of funding which, if paid on an ongoing basis, is projected to cover normal
cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty
years.
Annual OPEB and Net OPEB Obligation
Annual required
contribution
Interest on net OPEB
obligation
Adjustment to ARC
Annual OPEB cost
Contribution made
Increase in net OPEB
obligation
Net OPEB obligation,
beginning of year
Net OPEB obligation,
end of year
Power
Water
Wastewater
$110,994
$35,609
$17,508
Broadband
$ 32,515
16,763
(19,633)
108,124
(53,576)
3,238
(3,792)
35,055
(18,562)
362
(424)
17,446
(4,714)
5,734
(6,715)
31,534
–
54,548
16,493
12,732
31,534
419,085
80,946
9,046
143,343
$473,633
$97,439
$21,778
$174,877
34
Morristown Utilities Commission
Notes to Financial Statements (continued)
11. Post-Employment Benefits (continued)
Annual OPEB and Net OPEB Obligation (continued)
The annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net
OPEB obligation is as follows:
Annual
OPEB
Cost
Fund
Percentage of
Annual OPEB Cost
Contributed
Net OPEB
Obligations
2015:
Power System
Water System
Wastewater System
Broadband System
$108,124
35,055
17,446
31,534
49.6%
53.0%
27.0%
–
$473,633
97,439
21,778
174,877
2014:
Power System
Water System
Wastewater System
Broadband System
$101,878
33,339
10,192
29,208
38.2%
48.8%
11.2%
–
$419,085
80,946
9,046
143,343
2013:
Power System
Water System
Broadband System
$109,042
31,628
26,595
19.8%
13.1%
–
$356,098
63,878
114,135
Funding Status and Funding Progress
System
Power
Water
Wastewater
Broadband
Actuarial Actuarial
Valuation Value of
Date
Assets
07/01/13
07/01/13
01/01/14
07/01/13
$–
–
–
–
Actuarial
Accrued Unfunded
Liability
AAL
Funded
(AAL)
(UAAL)
Ratio
$939,342
330,210
153,876
89,022
35
$939,342
330,210
153,876
89,022
–%
–%
–%
–%
Covered
Payroll
$4,089,606
1,221,906
583,274
1,076,414
UAAL as
a % of
Covered
Payroll
23.0%
27.0%
26.4%
8.3%
Morristown Utilities Commission
Notes to Financial Statements (continued)
11. Post-Employment Benefits (continued)
Actuarial Methods and Assumptions
The actuarial methods and assumptions used were applied consistently for the Power, Water,
Wastewater and Broadband Systems and were as follows:
Funding Interest Rate
2013 Medical/Rx Trend Rate
Ultimate Medical/Rx Trend Rate
Year Ultimate Trend Rate Reached
Actuarial Cost Method
Annual Payroll Growth Rate
Remaining Amortization Period at June 30, 2014
4%
9%
5%
2017
Entry Age Normal
2.5%
22.99 years
The required schedule of funding progress immediately following the notes to the financial
statements presents multi-year trend information about the change in actuarial value of plan assets
relative to the actuarial accrued liabilities for benefits.
The mortality rates are from the RP-2000 Combined Fully Generational Mortality Table with
projection scale AA. It was assumed that the following percentages of eligible employees would
retire each year:
Age
Rate
55-59
60-64
65-69
70+
3%
20%
15%
100%
It was also assumed that employees would terminate employment with the rate in the following
table:
Age
Male
Female
20
25
30
35
40
45
50
55
6.3%
5.0%
3.6%
2.3%
1.0%
0.9%
0.8%
0.6%
7.5%
6.0%
4.4%
2.9%
1.4%
1.2%
1.0%
0.7%
36
Morristown Utilities Commission
Notes to Financial Statements (continued)
11. Post-Employment Benefits (continued)
Actuarial Methods and Assumptions (continued)
It was assumed that health care cost would increase in accordance with the trend rates in the
following table:
Year
Medical
Rates
Dental
Rates
2013
2014
2015
2016
9%
8%
7%
6%
5%
5%
5%
5%
It was assumed that 100% of the current active employees covered under the active plan on the
day before retirement would enroll in the retiree medical plan upon retirement. It was also assumed
that 10% of the male and 10% of the female employees who elect retiree health coverage for
themselves would also elect coverage for their spouse upon retirement. It was assumed that male
spouses are three years older than their wives and female spouses are three years younger than the
retiree. For current retirees, actual census information was used.
The preparation of the actuarial liabilities calculated requires management to make assumptions
discussed above. Due to the use of these assumptions, actual results may differ from the estimates.
The discount rate considers inflationary rate adjustments.
12. Risk Management
The Systems are exposed to various risks of loss related to torts; theft of, damage to and destruction
of assets; errors and omissions; natural disasters; and injuries of employees for which the Systems
carry commercial insurance purchased from independent third parties. The Systems have not
experienced an insurance settlement in excess of insurance coverage in any of the past three fiscal
years. The Systems bear the risk of loss up to the deductible amounts which are disclosed in the
accompanying Statistical Section. During the ordinary course of business, the System is subject to
various other disputes and claims pertaining to contracts, and there are uncertainties surrounding
the ultimate resolution of these matters. Because of these uncertainties, it is at least reasonably
possible the amounts recorded will change within the near term.
37
Morristown Utilities Commission
Notes to Financial Statements (continued)
13. Net Position
Net position consists of the following as of June 30, 2015:
Power System:
Net investment in capital assets consists of the following:
Net capital assets
Less related liabilities:
Current portion of long-term debt and contractual obligation
Long-term debt and contractual obligation, less current portion
Total related liabilities
Net investment in capital assets
Water System:
Net investment in capital assets consists of the following:
Net capital assets
Restricted unspent bond funds
Less related liabilities:
Current portion of long-term debt
Long-term debt, less current portion
Total related liabilities
Net investment in capital assets
Wastewater System:
Net investment in capital assets consists of the following:
Net capital assets
Restricted unspent bond funds
Less related liabilities:
Current portion of long-term debt and contractual obligation
Long-term debt and contractual obligation, less current portion
Total related liabilities
Net investment in capital assets
Broadband System:
Net investment in capital assets consists of the following:
Net capital assets
Restricted unspent bond funds
Less related liabilities:
Current portion of long-term debt and capital lease obligation
Long-term debt and capital lease obligation, less current portion
Total related liabilities
Net investment in capital assets
38
$61,916,874
1,177,057
18,142,678
19,319,735
$42,597,139
$39,045,279
2,913,243
880,885
12,671,803
13,552,688
$28,405,834
$82,577,414
13,422,259
3,746,864
67,401,306
71,148,170
$24,851,503
$ 7,187,713
215,838
249,949
5,169,654
5,419,603
$ 1,983,948
Morristown Utilities Commission
Notes to Financial Statements (continued)
13. Net Position (continued)
Unrestricted net position consists of all other items in the balance sheets not reflected above.
The Broadband System funded a portion of its net capital assets with a line of credit from the
Power System (Note 6), the Broadband System excludes this component from the calculation of
net investment in capital assets as the liability is not external to the Commission.
39
Morristown Utilities Commission
Required Supplemental Information
Schedule of Funding Progress for
Morristown Utilities Retiree Benefit Plan
June 30, 2015
Actuarial
Valuation
Date
Actuarial Actuarial Accrued
Value of
Liability (AAL) Assets
Entry Age
(a)
(b)
Unfunded
AAL
(UAAL)
(b-a)
Funded
Ratio
(a/b)
Covered
Payroll
(c)
UAAL as a
Percentage
of Covered
Payroll
[(b-a)\c]
Power
7/1/2013
7/1/2011
7/1/2009
-
7/1/2013
7/1/2011
7/1/2009
Wastewater
1/1/2014
$
939,342
927,036
688,839
939,342
927,036
688,839
0%
0%
0%
-
330,210
288,818
234,359
330,210
288,818
234,359
-
153,876
-
89,022
64,160
34,298
$
4,089,606
4,210,185
3,660,573
23%
22%
19%
0%
0%
0%
1,221,906
1,137,002
1,065,151
27%
25%
22%
153,876
0%
583,274
26%
89,022
64,160
34,298
0%
0%
0%
1,076,414
927,632
735,342
8%
7%
5%
Water
Broadband
7/1/2013
7/1/2011
7/1/2009
Note 1: The Commission assumed the assets, liabilities and operations of the Wastewater System as of December 30, 2013.
40
Morristown Utilities Commission
Required Supplemental Information
Schedule of Employer Contributions for
Morristown Utilities Retiree Benefit Plan
June 30, 2015
Annual
Required
Fiscal Year Contribution
Power System
2015
2014
2013
Water System
2015
2014
2013
Wastewater System
Broadband System
$
110,994
105,784
110,931
Contribution
Made
$
Percentage
Contributed
53,376
38,891
21,538
48%
37%
19%
35,609
34,040
31,884
18,562
16,271
4,145
52%
48%
13%
2015
2014
17,508
10,192
4,714
1,146
27%
11%
2015
2014
2013
32,515
30,460
27,210
-
-
Note 1: The Commission assumed the assets, liabilities and operations of the Wastewater System as
of December 30, 2013.
41
Morristown Utilities Commission
Schedule of Long-term Debt, Principal and Interest Requirements-Power System
June 30, 2015
Year
Ending
June 30,
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2003 Promissory Note
Principal
$
$
250,000
250,000
250,000
750,000
2008 Promissory Note
Interest
$
$
945
630
315
1,890
Principal
$
403,929
426,579
449,229
471,879
494,529
517,180
543,605
570,030
600,230
630,431
660,631
694,606
728,582
766,332
804,082
845,608
887,133
932,433
977,734
1,026,809
$ 13,431,571
2013 Promissory Note
Interest
$
$
9,402
9,119
8,821
8,506
8,176
7,830
7,468
7,087
6,688
6,268
5,827
5,364
4,878
4,368
3,832
3,269
2,677
2,056
1,403
719
113,758
42
Principal
$
378,000
393,000
409,000
425,000
442,000
460,000
478,000
498,000
518,000
538,000
89,619
$ 4,628,619
Total
Interest
$
$
10,853
11,052
10,030
8,966
7,861
6,712
5,516
4,273
2,979
1,632
233
70,107
Principal
$
1,031,929
1,069,579
1,108,229
896,879
936,529
977,180
1,021,605
1,068,030
1,118,230
1,168,431
750,250
694,606
728,582
766,332
804,082
845,608
887,133
932,433
977,734
1,026,809
$ 18,810,190
Interest
$
21,200
20,801
19,166
17,472
16,037
14,542
12,984
11,360
9,667
7,900
6,060
5,364
4,878
4,368
3,832
3,269
2,677
2,056
1,403
719
$ 185,755
Morristown Utility Commission
Schedule of Long-term Debt, Principal and Interest Requirements-Water System
June 30, 2015
2011 DWSRF
Promissory Note
Year
Ending
June 30,
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Principal
$
$
49,279
50,692
52,145
53,640
55,178
56,760
58,387
60,061
61,783
63,554
65,376
67,251
69,179
71,162
73,202
75,301
77,299
1,060,249
2002 DWSRF
Promissory Note
Interest
$
29,369
27,956
26,503
25,008
23,470
21,888
20,261
18,587
16,865
15,094
13,272
11,397
9,469
7,486
5,446
3,347
1,188
$ 276,606
Principal
$
$
516,606
530,252
544,258
558,635
573,391
588,537
604,082
620,039
636,417
653,228
586,994
6,412,439
2009 DWSRF
Promissory Note
Interest
$
$
Principal
161,214
147,568
133,562
119,185
104,429
89,283
73,738
57,781
41,403
24,592
7,332
960,087
43
$
$
315,000
330,000
340,000
350,000
360,000
375,000
390,000
400,000
415,000
430,000
445,000
460,000
475,000
490,000
505,000
6,080,000
Total
Interest
$
$
200,181
189,280
177,957
166,296
154,297
141,876
128,947
115,596
101,823
87,542
72,755
57,460
41,659
25,350
8,533
1,669,552
Principal
$
880,885
910,944
936,403
962,275
988,569
1,020,297
1,052,469
1,080,100
1,113,200
1,146,782
1,097,370
527,251
544,179
561,162
578,202
75,301
77,299
$ 13,552,688
Interest
$
390,764
364,804
338,022
310,489
282,196
253,047
222,946
191,964
160,091
127,228
93,359
68,857
51,128
32,836
13,979
3,347
1,188
$ 2,906,245
Morristown Utility Commission
Schedule of Long-term Debt, Principal and Interest Requirements-Wastewater System
June 30, 2015
2008-50545
Promissory Note
Year
Ending
June 30,
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Principal
$
$
68,970
72,960
76,380
80,370
84,360
88,350
92,910
97,470
102,600
107,730
112,860
118,560
124,260
130,530
1,358,310
2008-50536
Promissory Note
Interest
$
$
3,939
3,739
3,528
3,306
3,073
2,828
2,572
2,303
2,020
1,722
1,410
1,083
739
378
32,640
Principal
$
$
75,250
78,750
84,000
87,500
92,750
96,250
101,500
106,750
112,000
117,250
122,500
129,500
136,500
1,340,500
2008-50518
Promissory Note
Interest
$
$
3,887
3,669
3,441
3,197
2,944
2,675
2,395
2,101
1,791
1,467
1,127
771
396
29,861
Principal
$
$
170,500
178,500
187,500
197,000
207,000
217,500
228,000
239,500
251,500
264,000
277,500
291,000
305,500
3,015,000
44
Interest
$
$
2009
Promissory Note
2008-50532
Promissory Note
8,744
8,249
7,731
7,188
6,616
6,016
5,385
4,724
4,030
3,300
2,535
1,730
886
67,134
Principal
$
$
459,333
482,542
506,832
532,200
558,648
586,716
615,862
646,629
679,014
713,018
748,643
785,885
825,289
8,140,611
Interest
$
$
23,608
22,276
20,876
19,407
17,863
16,243
14,542
12,756
10,880
8,911
6,843
4,672
2,393
181,270
Principal
$
$
62,948
64,855
66,763
68,670
70,577
72,485
74,774
77,063
79,352
81,641
83,930
86,218
88,889
91,559
94,231
96,901
99,571
102,623
166,709
1,629,759
Interest
$
$
45,650
43,818
41,931
39,988
37,990
35,936
33,826
31,651
29,408
27,099
24,723
22,281
19,772
17,185
14,521
11,779
8,959
6,061
3,079
495,657
Morristown Utility Commission
Schedule of Long-term Debt, Principal and Interest Requirements-Wastewater System (continued)
June 30, 2015
2013
Promissory Note
Year
Ending
June 30,
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Principal
$
$
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
142,587
16,142,587
2007 CWSRF
Promissory Note
Interest
$
$
424,375
552,704
516,204
479,704
443,204
406,704
370,204
333,704
297,204
260,704
224,204
187,704
151,204
114,704
78,204
41,704
5,211
4,887,646
Principal
$
$
435,312
444,360
453,600
463,032
472,656
482,496
492,528
502,764
513,228
523,896
534,792
545,916
557,268
568,860
580,680
592,764
351,460
2,484
8,518,096
2009 CWSRF
Promissory Note
Interest
$
$
171,312
162,259
153,018
143,584
133,955
124,125
114,091
103,849
93,393
82,720
71,825
60,703
49,350
37,761
25,930
13,854
2,414
1,544,143
Principal
$
$
53,052
54,528
56,028
57,576
59,172
60,804
62,484
64,212
65,988
67,812
69,684
71,616
73,596
75,636
77,724
79,872
82,080
27,979
1,159,843
45
2013 CWSRF
Promissory Note
Interest
$
$
31,000
29,533
28,026
26,477
24,885
23,249
21,568
19,841
18,066
16,241
14,367
12,440
10,460
8,425
6,334
4,186
1,978
159
297,235
Principal
$
$
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
228,032
2,478,032
General Obligation
Bonds, Series 2012
Interest
$
$
35,688
31,913
28,138
24,363
20,588
16,813
13,038
9,263
5,488
1,715
187,007
Principal
$
$
1,086,117
1,086,117
1,086,117
1,086,117
1,086,117
1,086,117
1,086,117
1,086,117
1,086,117
1,086,117
1,086,117
1,086,117
1,086,117
1,086,117
1,077,730
1,077,730
1,077,730
1,077,730
1,077,730
1,077,730
1,077,730
1,078,019
23,827,767
Interest
$
$
767,926
735,343
702,759
670,176
637,592
605,009
572,425
539,842
507,258
469,244
425,800
382,355
338,910
295,466
257,577
225,245
192,914
159,908
125,555
90,529
54,829
18,322
8,774,984
Morristown Utility Commission
Schedule of Long-term Debt, Principal and Interest
Requirements-Wastewater System
(continued)
June 30, 2015
Year Ending
June 30,
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Total
Principal
3,661,482
3,712,612
3,767,220
3,822,465
3,881,280
3,940,718
4,004,175
4,070,505
4,139,799
4,189,496
4,036,026
4,114,812
4,197,419
2,952,702
2,830,365
2,847,267
1,753,428
1,210,816
1,244,439
1,077,730
1,077,730
1,078,019
67,610,505
$
$
46
$
$
Interest
1,516,129
1,593,503
1,505,652
1,417,390
1,328,710
1,239,598
1,150,046
1,060,034
969,538
873,123
772,834
673,739
574,110
473,919
382,566
296,768
211,476
166,128
128,634
90,529
54,829
18,322
16,497,577
Morristown Utility Commission
Schedule of Long-term Debt, Principal and Interest Requirements-BroadbandSystem
June 30, 2015
Year
Ending
June 30,
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Interfund Loan
from Power System
2008 Promissory Note
Principal
131,071
138,421
145,771
153,121
160,471
167,820
176,395
184,970
194,770
204,569
214,369
225,394
236,418
248,668
260,918
274,392
287,867
302,567
317,266
333,191
$
4,358,429
$
$
$
Interest
3,051
2,959
2,862
2,760
2,653
2,541
2,423
2,300
2,170
2,034
1,891
1,741
1,583
1,417
1,243
1,061
869
667
455
234
36,914
Principal
611,930
653,027
654,662
656,300
657,943
659,589
661,240
662,895
664,554
162,588
$
6,044,728
$
$
$
2014 Promissory Note
Interest
14,422
12,834
11,200
9,561
7,918
6,272
4,621
2,966
1,307
66
71,167
47
Principal
100,000
102,000
105,000
108,000
111,000
114,000
117,000
120,000
123,000
$
1,000,000
$
$
$
Interest
24,605
21,989
19,308
16,550
13,714
10,800
7,809
4,740
1,593
121,108
Total
Principal
843,001
893,448
905,433
917,421
929,414
941,409
954,635
967,865
982,324
367,157
214,369
225,394
236,418
248,668
260,918
274,392
287,867
302,567
317,266
333,191
$ 11,403,157
$
$
$
Interest
42,078
37,782
33,370
28,871
24,285
19,613
14,853
10,006
5,070
2,100
1,891
1,741
1,583
1,417
1,243
1,061
869
667
455
234
229,189
Morristown Utilities Commission
Schedule of Net Position by Fund (Last Ten Years)
Fiscal Years 2015 - 2006 (in thousands)
2015
Power System:
Net investment in capital assets
Unrestricted
Total net position
Water System:
Net investment in capital assets
Restricted
Unrestricted
Total net position
Wastewater System:
Net investment in capital assets
Restricted
Unrestricted
Total net position
Broadband System:
Net investment in capital assets
Unrestricted deficit
Total net position
$
$
$
$
$
$
$
$
2014
2013
2012
2011
2010
2009
2008
2007
2006
42,597
16,020
58,617
$ 41,510
17,305
$ 58,815
$ 39,421
18,076
$ 57,497
$ 37,913
16,560
$ 54,473
$ 34,586
17,235
$ 51,821
$ 32,756
15,634
$ 48,390
$ 32,023
13,275
$ 45,298
$ 31,914
11,210
$ 43,124
$ 31,941
9,391
$ 41,332
$ 30,052
10,106
$ 40,158
28,406
3,546
31,952
$ 26,909
4,523
$ 31,432
$ 26,730
4,385
$ 31,115
$ 26,034
4,465
$ 30,499
$ 25,841
3,794
$ 29,635
$ 24,597
585
2,625
$ 27,807
$ 23,359
561
2,406
$ 26,326
$ 22,356
301
2,450
$ 25,107
$ 21,812
557
2,087
$ 24,456
$ 21,164
532
1,942
$ 23,638
24,851
1,879
26,730
$ 18,009
5,796
$ 23,805
$
$
$
$
$
$
$
$
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
(550) $ 1,047
1,984 $ 2,192 $ 1,275 $ 1,159 $
773 $
149 $
728 $
758 $
(5,489)
(7,034)
(7,149)
(7,281)
(6,804)
(6,181)
(6,233)
(5,649)
(1,967)
(1,663)
(3,505) $ (4,842) $ (5,874) $ (6,122) $ (6,031) $ (6,032) $ (5,505) $ (4,891) $ (2,517) $
(616)
.
Note 1: Information is summarized from the audited financial statements for the year indicated.
Note 2: Broadband organization began in 2005 and operations commenced in 2006.
Note 3: In 2012, the Commission implemented GASB 65 which changed the accounting for bond issue costs. This resulted in a restatement of net position for Power, Water,
and Broadband of $527,518, $74,382, and $170,225, respectively as of July 1, 2011.
Note 4: The Commission assumed the assets, liabilities and operations of the Wastewater System as of December 30, 2013.
48
Morristown Utilities Commission
Schedule of Power System Revenues and Expenses (Last Ten Years)
Fiscal Years 2015 - 2006 (in thousands)
2015
Operating revenues:
Residential
Commercial
Industrial
Street and security lighting
Total metered revenue
Interfund services
Other revenues
Total operating revenues
$
Operating expenses:
Power purchased from Tennessee Valley Authority
Operations
Maintenance
Interfund services
Depreciation
Amortization of plant acquisition adjustments
Taxes
Miscellaneous
Total operating expenses
Operating income
17,001
5,319
51,648
1,184
75,152
1,316
1,434
77,902
$
62,678
5,399
2,483
1,111
4,702
87
336
76,796
1,106
Other (expense) income
(147)
Income before reimbursement, contributions
and transfers
TVA load control/capacity reimbursement
Contributions
Plant costs recovered through contributions
Transfers out (tax equivalent payments to
City of Morristown)
(Decrease) increase in net position
2014
$
16,878
5,296
52,096
1,155
75,425
1,190
1,545
78,160
2013
$
62,661
5,408
2,161
847
4,486
87
305
75,955
2,205
16,472
5,248
51,961
1,170
74,851
963
1,323
77,137
$
62,088
4,941
2,000
867
4,104
86
318
42
74,446
2,691
(131)
2,074
331
-
2,583
1,501
-
(1,157)
(198) $
(1,087)
(1,061)
$
3,023
Note 1: Information is summarized from the audited financial statements for the years indicated.
49
15,645
5,199
52,499
1,232
74,575
773
1,215
76,563
2011
$
61,324
5,008
1,804
560
3,363
122
260
72,441
4,122
(108)
959
-
1,318
2012
4,076
(896)
3,180
$
62,799
4,882
1,764
3,081
130
226
29
72,911
4,255
(46)
$
17,235
5,328
51,678
1,197
75,438
546
1,182
77,166
2010
15,022
5,001
44,811
1,114
65,948
685
1,048
67,681
$
2008
15,941
5,450
48,565
1,183
71,139
1,144
72,283
$
13,418
4,746
42,996
1,054
62,214
1,137
63,351
2007
$
12,177
4,604
39,757
1,001
57,539
1,093
58,632
2006
$
11,304
4,246
38,306
962
54,818
1,003
55,821
54,288
4,653
1,737
342
2,549
112
204
12
63,897
3,784
60,370
4,415
1,709
737
1,877
96
204
52
69,460
2,823
52,594
4,292
1,596
2,226
84
204
21
61,017
2,334
49,108
4,057
1,487
2,174
86
190
25
57,127
1,505
46,256
3,672
1,313
1,957
160
187
41
53,586
2,235
(47)
11
54
156
326
244
4,208
1,501
(1,501)
3,795
-
2,877
-
2,490
-
1,831
-
2,479
-
(777)
$
2009
3,431
(703)
$
3,092
(703)
$
2,174
(699)
$
1,791
(656)
$
1,175
(621)
$
1,858
Morristown Utilities Commission
Schedule of Water System Revenues and Expenses (Last Ten Years)
Fiscal Years 2015 - 2006 (in thousands)
2015
Operating revenues:
General
Public authorities
Private fire protection
Public fire protection
Total metered sales
Interfund services
Other revenue
Total operating revenues
$
Operating expenses:
Operations
Maintenance
Interfund services used
Depreciation and amortization
Miscellaneous
Total operating expenses
Operating income
2014
6,163
57
164
27
6,411
441
33
6,885
$
3,531
561
319
1,610
6,021
864
Other income (expense):
Interest income
Interest expense
Total other (expense) income
2013
6,182
58
180
30
6,450
187
226
6,863
$ 6,161
80
180
29
6,450
21
6,471
3,622
674
288
1,552
6,136
727
3,176
594
189
1,416
26
5,401
1,070
2012
$
6,330
81
165
27
6,603
45
6,648
2011
$
3,144
541
1,680
8
5,373
1,275
6,590
88
162
26
6,866
70
6,936
2010
$
3,186
589
79
1,439
40
5,333
1,603
2009
6,444
66
162
31
6,703
66
6,769
2,931
518
1,403
45
4,897
1,872
8
(415)
(407)
12
(439)
(427)
15
(477)
(462)
17
(482)
(465)
Income before contributions and transfers
457
300
608
810
1,116
1,485
Contributions
Appalachian Regional Commission grant
Transfers out (tax equivalent payments to
City of Morristown)
100
-
53
-
43
-
165
-
747
-
(36)
(36)
(36)
(36)
(36)
Increase in net position
$
521
$
317
$
615
Note 1: Information is summarized from the audited financial statements for the years indicated.
50
$
939
20
(507)
(487)
$
1,827
$
6,015
61
161
34
6,271
60
6,331
$
3,165
488
1,157
41
4,851
1,480
21
(408)
(387)
$
2008
2007
5,261
52
161
33
5,507
65
5,572
$
2,872
568
1,220
40
4,700
872
$
2,730
434
1,155
49
4,368
967
5,038
54
157
33
5,282
57
5,339
2,465
446
1,078
50
4,039
1,300
111
(355)
(244)
123
(352)
(229)
1,196
628
738
1,019
28
-
54
-
56
-
111
-
78
-
(32)
(32)
(32)
(32)
(32)
1,481
37
(321)
(284)
5,029
54
160
33
5,276
59
5,335
2006
$
1,218
$
652
$
817
78
(359)
(281)
$
1,065
Morristown Utilities Commission
Schedule of Wastewater System Revenues and Expenses (Last Two Years)
Fiscal Years 2015 and 2014 (in thousands)
2015
Operating revenues:
General
Public authorities
Total metered sales
Other revenues
Total operating revenues
$
Operating expenses:
Operations
Maintenance
Interfund services used
Depreciation and amortization
Total operating expenses
Operating income
2014
12,083
164
12,247
809
13,056
$
3,996
848
443
3,276
8,563
4,493
Other income (expense):
Interest income
Financing cost
Interest expense
Total other expense
12,547
110
12,657
420
13,077
4,663
766
201
2,510
8,140
4,937
21
(90)
(1,174)
(1,243)
158
(222)
(905)
(969)
Income before contributions and transfers
3,250
3,968
Contributions
Transfers out (tax equivalent payments to
City of Morristown)
51
139
(376)
(305)
Increase in net position
$
2,925
$
3,802
Note 1: Information is summarized from the audited financial statements for the year indicated.
Note 2: The Commission assumed the operations of the Wastewater System as of December 30,
2013.
51
Morristown Utilities Commission
Schedule of Broadband System Revenues and Expenses (Last Ten Years)
Fiscal Years 2015 - 2006 (in thousands)
Operating revenues:
Video
Internet
Voice
Total broadband sales
Interfund services provided
Other revenue
Total operating revenues
Operating expenses:
Operations
Maintenance
Interfund services used
Depreciation and amortization
Taxes
Total operating expenses
Operating income (loss)
Other income (expense):
Interest income
Financing cost
Interest expense
Total other expense
Increase (decrease) in net position
2015
2014
2013
2012
2011
2010
2009
2008
2007
$ 3,483
2,638
2,118
8,239
1,173
311
9,723
$ 2,876
2,657
2,096
7,629
921
387
8,937
$ 2,802
2,307
2,086
7,195
937
217
8,349
$ 2,729
2,105
1,981
6,815
560
225
7,600
$ 2,555
1,702
1,935
6,192
130
6,322
$ 2,544
1,536
1,934
6,014
342
146
6,502
$ 2,214
1,390
1,867
5,471
737
85
6,293
$ 1,790
1,124
1,511
4,425
79
4,504
$ 1,137
575
798
2,510
39
2,549
6,395
303
1,057
482
64
8,301
1,422
6,182
239
962
372
88
7,843
1,094
6,121
199
845
821
53
8,039
310
5,579
208
773
860
52
7,472
128
4,874
135
467
757
41
6,274
48
2
(29)
(58)
(85)
$ 1,337
2
(32)
(32)
(62)
$ 1,032
2
(63)
(61)
$
249
2
(51)
(49)
$
79
1
(48)
(47)
$
1
$
4,717
212
685
1,282
36
6,932
(430)
4,568
204
1,532
65
6,369
(76)
3,908
197
1,489
73
5,667
(1,163)
3,062
94
741
55
3,952
(1,403)
1
(99)
(98)
8
(545)
(537)
30
(1,241)
(1,211)
(498)
(498)
(528) $
Note 1: Information is summarized from the audited financial statements for the years indicated.
Note 2: The Broadband System began operations in 2006.
Note 3: In 2009, the Broadband System began charging the Power System for outage and System management.
Note 4: In 2010, the Power System began charging the Broadband System for network usage.
52
2006
$
45
23
35
103
103
603
84
5,467
2
6,156
(6,053)
(20)
(20)
(613) $ (2,374) $ (1,901) $ (6,073)
Morristown Utilities Commission
Schedule of Purchased Power, Consumption and Active Service Statistics (Last Ten Years)
Fiscal Years 2015 - 2006
2015
2014
2013
2012
PURCHASED POWER - (Megawatt Hours)
Purchased from TVA
930,256
918,686
901,805
CONSUMPTION - (Megawatt Hours)
Residential
Commercial
Industrial
Street and athletic
Outdoor lighting
Internal use
Total consumption
165,278
46,991
681,164
5,309
4,678
1,184
904,604
167,038
47,068
672,250
5,070
4,761
986
897,173
25,652
21,513
Line losses and megawatt hours
unaccounted for
Percentage of line losses and megawatt hours
unaccounted for to purchased power
ACTIVE SERVICE (number of customers)
Residential
Commercial
Industrial
Street and athletic
Outdoor lighting
Total active service
2.76%
11,826
2,141
439
76
33
14,515
2.34%
11,721
2,120
458
73
34
14,406
2011
2010
2009
2008
2007
2006
909,825
925,207
892,562
851,958
926,326
911,991
905,815
161,666
46,611
663,585
4,979
4,730
965
882,536
153,060
46,417
676,897
5,039
4,860
786
887,059
173,555
48,299
676,441
5,088
4,909
1,100
909,392
166,887
49,233
640,236
4,856
4,766
1,230
867,208
164,160
50,978
605,244
4,790
4,825
1,205
831,202
165,828
53,632
674,587
4,892
4,960
1,092
904,991
162,131
54,414
661,511
4,916
4,922
1,161
889,055
159,997
53,075
660,791
4,907
4,940
1,120
884,830
19,269
22,766
15,815
25,354
20,756
21,335
22,936
20,985
2.14%
11,764
2,121
449
70
34
14,438
2.50%
11,752
2,105
447
71
31
14,406
Note 1: Information is compiled from internally generated statistical reports.
53
1.71%
11,683
2,085
467
69
32
14,336
2.84%
11,819
2,109
464
69
35
14,496
2.44%
11,545
2,166
455
69
35
14,270
2.30%
11,687
2,210
465
70
37
14,469
2.51%
11,191
2,707
462
69
36
14,465
2.32%
11,098
2,619
464
67
37
14,285
Morristown Utilities Commission
Schedule of Water Production, Consumption and Active Service Statistics (Last Ten Years)
Fiscal Years 2015 - 2006
2015
2013
2012
3,177,165
3,179,415
3,211,089
3,391,595
2,742,287
44,679
1,513
2,788,479
2,770,846
41,529
32,352
2,844,727
2,760,419
42,055
33,646
2,836,120
2,815,744
42,939
33,981
2,892,664
306,253
332,438
343,295
318,425
PRODUCTION - (Thousands of gallons)
Produced
3,094,732
CONSUMPTION - (Thousands of gallons)
General
Public authorities
Public fire protection
Internal use
Total consumption
Gallons unaccounted for
Percent of gallons unaccounted for
to production
ACTIVE SERVICE (number of customers)
General
Public authorities
Private fire protection
Public fire protection
Total active service
9.90%
12,255
45
289
12,589
2014
10.46%
10.80%
12,221
44
284
12,549
12,242
44
283
12,569
9.92%
12,224
44
285
12,553
Note 1: Information is compiled from internally generated statistical reports.
54
2011
2009
2008
2007
2006
3,244,465
3,249,905
3,391,690
3,249,146
3,111,291
2,981,110
48,268
36,387
3,065,765
2,871,614
35,163
2,917
36,616
2,946,310
2,927,487
35,207
5,000
20,922
2,988,616
3,082,407
37,057
5,000
21,382
3,145,846
2,902,235
37,571
5,000
20,224
2,965,030
2,958,023
39,365
5,000
19,933
3,022,321
325,830
298,155
261,289
245,844
284,116
88,970
9.61%
12,179
42
280
12,501
2010
9.19%
12,241
43
283
12,567
8.04%
12,183
44
278
1
12,506
7.25%
12,617
43
276
1
12,937
8.74%
12,368
44
271
1
12,684
2.86%
12,199
45
272
1
12,517
Morristown Utilities Commission
Schedule of Wastewater Treated, Consumption and Active Service Statistics
(Last Two Years)
Fiscal Years 2015 to 2014
2015
2014
TREATED - (Thousands of gallons)
Treated
1,518,723
1,714,921
CONSUMPTION - (Thousands of gallons)
General
Public authorities
Total consumption
1,239,402
10,200
1,249,602
1,256,780
9,726
1,266,506
10,540
41
10,581
10,567
9
10,576
ACTIVE SERVICE (number of customers)
General
Public authorities
Total active service
Note 1:
Note 2:
Information is compiled from internally generated statistical reports.
The commissions assumed operations of the Wastewater System in
December 2013.
55
Morristown Utilities Commission
Schedule of Broadband Active Service Statistics (Last Ten Years)
Fiscal Years 2015 - 2006
2015
ACTIVE SERVICE (number of customers)
Video
4,227
Internet
4,654
Voice
2,833
Total active service
11,714
2014
2013
2012
2011
2010
2009
2008
2007
2006
4,097
4,165
2,835
11,097
4,143
4,010
2,908
11,061
4,085
3,800
2,911
10,796
3,738
3,397
2,784
9,919
3,687
3,298
2,830
9,815
3,771
3,100
2,881
9,752
3,525
2,757
2,741
9,023
2,594
1,976
1,985
6,555
711
515
568
1,794
Note 1: Information is compiled from internally generated statistical reports.
Note 2: The Broadband System began operations in 2006.
56
Morristown Utilities Commission
Schedule of Outstanding Long-Term Debt by Type (Last Ten Years)
Fiscal Years 2015 - 2006
Fiscal
Year
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
Promissory
Notes
$ 18,810,190
18,331,536
15,687,238
15,937,655
16,419,859
16,886,961
1,825,000
1,950,000
2,075,000
2,200,000
Fiscal
Year
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
Revenue
Bonds
$
255,000
730,000
730,000
950,000
1,380,000
Power
Cooperative
Notes
$
314,108 $
394,089
474,073
554,056
675,453
796,852
447,618
538,123
384,188
307,033
Total
19,124,298
18,725,625
16,161,311
16,491,711
17,095,312
17,683,813
2,272,618
2,488,123
2,459,188
2,507,033
Per
Customer
$
1,318
1,230
1,119
1,145
1,192
1,220
159
174
170
176
Water
Promissory
Notes
$ 13,552,688 $
14,409,471
15,241,951
16,221,011
16,852,375
16,800,967
9,898,263
10,484,285
11,043,213
10,159,869
Total
13,552,688
14,409,471
15,241,951
16,221,011
16,852,375
17,055,967
10,628,263
11,214,285
11,993,213
11,539,869
Per
Customer
$
1,077
$
1,148
1,213
1,292
1,348
1,357
850
866
946
922
Per
Customer
$
6,390
5,348
Per
Customer
$ 1,876
2,082
2,016
2,149
3,028
2,985
7,019
7,232
7,517
31,690
Fiscal
Year
2015
2014
Bonds
$ 23,827,767
24,913,883
Wastewater
Promissory
Notes
Total
$ 43,782,738 $ 67,610,505
56,493,784
31,579,901
Fiscal
Year
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
Interfund
Note
$ 6,044,728
6,141,498
6,372,792
6,749,697
6,493,816
6,077,005
6,354,668
5,992,345
-
Broadband
Promissory
Notes
Total
$ 5,358,429 $ 11,403,157
5,483,376
11,624,874
4,603,423
10,976,215
4,717,346
11,467,043
4,825,142
11,318,958
4,928,039
11,005,044
20,115,000
26,469,668
19,500,000
25,492,345
19,500,000
19,500,000
18,000,000
18,000,000
Note 1: Broadband operations commenced in 2006.
Note 2: During 2010, the Power System assumed $14,726,417 from the Broadband System associated with the
transfer of assets.
Note 3: The Commission assumed the assets, liabilities and operations of the Wastewater System as of December 30, 2013.
57
Morristown Utilities Commission
Schedule of Water System Revenue Note Coverage (Last Ten Years)
Fiscal years 2015 – 2006
(dollar amounts in thousands)
Fiscal
Year
Gross
Operating
Revenues Expenses
(1)
(2)
2015
$
Net
Revenue
For Debt
Service
Debt Service Requirements
Principal Interest
Total
Coverage
6,885 $
4,411 $
2,474 $
857 $
415 $
1,272
1.94
2014
6,863
4,584
2,279
537
219
756
3.01
2013
6,471
3,985
2,486
524
233
757
3.28
2012
6,648
3,693
2,955
478
200
678
4.36
2011
6,936
3,895
3,041
699
244
943
3.22
2010
6,769
3,494
3,275
673
268
941
3.48
2009
6,332
3,694
2,638
651
290
941
2.80
2008
5,573
3,480
2,093
540
312
852
2.46
2007
5,335
3,213
2,122
703
342
1,045
2.03
2006
5,339
2,961
2,378
555
110
665
3.58
(1) Total Water System revenues (excluding interest).
(2) Total Water System operating expenses excluding depreciation and amortization.
58
Morristown Utilities Commission
Schedule of Wastewater System Revenue Note Coverage
Last Two Years
(dollar amounts in thousands)
Fiscal
Year
Gross
Revenues
(1)
2015
2014
$ 13,056 $
$ 13,077 $
Net
Revenue
For Debt
Service
Operating
Expenses
(2)
5,287
5,630
$
$
Debt Service Requirements
Principal Interest
Total
Coverage
7,769 $
7,447 $
1,019 $ 1,174 $
466 $ 221 $
2,193
687
3.54
10.84
Note 1: The Commission assumed the assets, liabilities and operations of the Wastewater System
as of December 30, 2013
(1) Total Wastewater System revenues (excluding interest).
(2) Total Wastewater System operating expenses excluding depreciation and amortization.
59
Morristown Utilities Commission
Schedule of Property, Casualty and Other Insurance
June 30, 2015
Company
Type of Coverage
Distributor’s Insurance
Workers’ Compensation
Distributor’s Insurance
Limits
$
Deductible
Period of
Coverage
1,000,000
N/A 07/01/14 to 06/30/15
Commercial General Liability
250,000
N/A 07/01/14 to 06/30/15
Distributor’s Insurance
Excess General Liability
750,000
N/A 07/01/14 to 06/30/15
Distributor’s Insurance
Automobile Liability
1,000,000
$0 07/01/14 to 06/30/15
Distributor’s Insurance
Umbrella Liability
2,000,000
N/A 07/01/14 to 06/30/15
Distributor’s Insurance
Property Damage
136,107,152
N/A 07/01/14 to 06/30/15
Distributor’s Insurance
Boiler & Machinery
50,000,000
N/A 07/01/14 to 06/30/15
Distributor’s Insurance
Commercial Crime
1,000,000
N/A 07/01/14 to 06/30/15
Distributor’s Insurance
Public Officials and Employees’
Liability
5,000,000
N/A 07/01/14 to 06/30/15
Distributor’s Insurance
Fiduciary Liability
1,000,000
N/A 07/01/14 to 06/30/15
Distributor’s Insurance
Pollution Liability
1,000,000
N/A 07/01/14 to 06/30/15
Distributor’s Insurance
Cyber and Privacy Protection
1,000,000
N/A 07/01/14 to 06/30/15
Note 1: All policies are owned by the Morristown Utility Commission and represent combined single limit
coverage of all systems, where applicable.
60
Morristown Utilities Commission
Schedule of Electric Rates (Last Ten Years)
Fiscal Years 2015 - 2006
2015
Residential
Customer charge per month
Energy charge:
First 2,000 kWh
Additional kWh per month
Commercial, Industrial, Governmental and Institutional
GSA-1 (demand of up to 1,000 kW through 2002, 50 kW thereafter)
Customer charge per month
Energy charge per kWh per month
GSA-2 (demand of 1,001 to 2,500 kW through 2002, 51 to 1,000kW thereafter)
Customer charge per month
Demand charge:
First 50 kW per month
Excess over 50 kW per month
Energy charge:
First 15,000 kWh per month
Additional kWh per month
GSA-3 (demand of 2,501 to 5,000 through 2002, 1,001 to 5,000 kW)
Customer charge per month
Demand charge:
First 1,000kW per month
Excess over 1,000 kW per month
Energy charge:
Per kWh per month
TDGSA (Demand > 5,001 kW)
Demand charge:
On peak
Excess off peak
Excess over contract
Energy charge:
On peak
Off peak (first 425 kWh)
Off peak (next 195 kWh)
Off peak (additional kWh)
$
16.71
2014
$
2013
16.71
$
2012
16.71
$
2011
16.71
$
16.71
$
16.71
$
13.21
0.09097
0.09097
$20 or $37
0.10165
$20 or $37
0.10502
$20 or $37
0.10076
$
26.00
0.10219
$
26.00
0.09899
$
26.00
0.09137
$
21.50
0.08463
$
$
$
$
133.00
$
133.00
$
133.00
$
127.00
$
$
133.00
0.08175
0.07968
2008
0.09515
0.09915
133.00
0.08934
0.08934
2009
0.09162
0.09162
133.00
0.09242
0.09242
2010
0.07582
0.07375
-
-
-
12.35
12.10
11.86
11.86
13.78
13.78
12.86
0.09650
0.06284
0.09986
0.06695
0.09559
0.06350
0.09702
0.06491
0.09381
0.06262
0.08570
0.04861
0.07896
0.04480
270.00
$
270.00
$
270.00
$
270.00
$
270.00
$
270.00
$
$
266.00
2007
11.50
$
2006
8.40
$
8.40
0.07943
0.00736
0.07189
0.07002
0.06735
0.06548
$
21.50 $
0.08787
15.25 $
0.07902
15.25
0.07453
$
127.00
127.00
127.00
$
$
$
12.52
11.48
11.48
0.0822
0.04904
0.07404
0.04378
0.06955
0.03935
266.00
$
205.00
$
205.00
12.50
14.32
12.24
13.99
11.98
13.67
11.98
13.67
11.68
13.31
13.88
15.44
12.90
14.29
12.54
13.87
11.49
12.64
11.49
12.64
0.06279
0.06691
0.06348
0.06489
0.06262
0.04903
0.04522
0.04946
0.04380
0.03937
17.24
4.14
17.24
0.09815
0.06163
0.04198
0.02529
$
16.84
4.07
16.84
0.10127
0.06568
0.04653
0.03026
$
16.45
4.00
16.45
0.09683
0.06215
0.04349
0.02764
61
$
16.45
4.00
16.45
0.09694
0.06226
0.04360
0.02775
$
-
$
-
$
-
$
-
$
-
$
-
Morristown Utilities Commission
Schedule of Electric Rates (Last Ten Years) (continued)
Fiscal Years 2015 - 2006
2015
Commercial, Industrial, Governmental
and Institutional (continued)
GSB (demand of 5,001 to 15,000 kW)
Customer charge per month
Demand charge:
Per kWh per month
Energy charge:
First 620 kWh per Kw per month
Additional kWh per month
GSB (non-manufacturing)
(demand of 15,001 to 25,000 kW)
Customer charge per month
Demand charge:
Per kWh per month
Energy charge:
First 620 kWh per Kw per month
Additional kWh per month
Part F (demand greater than 25,000 kW)
Customer charge per month
Demand charge:
Per kWh per month
Energy charge:
Per kWh per month
$
$
$
2014
-
$
2013
-
$
2012
-
$
2011
-
$
2010
2009
2008
2007
2006
1,500.00
$ 1,500.00
$ 1,500.00
$ 1,500.00
$ 1,500.00
$ 1,500.00
-
-
-
-
19.92
13.27
11.63
11.89
10.61
10.61
-
-
-
-
0.10427
0.02771
0.03740
0.03074
0.03899
0.03337
0.0307
0.03113
0.03216
0.02707
0.02771
0.02262
1,500.00
$ 1,500.00
$ 1,500.00
$ 1,500.00
$ 1,500.00
$ 1,500.00
-
$
-
$
-
$
-
$
-
-
-
-
19.92
14.89
14.21
13.78
12.95
12.95
-
-
-
-
0.10427
0.02771
0.04132
0.03372
0.04625
0.03928
0.04234
0.03559
0.03872
0.03241
0.03427
0.02796
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note 1: Compiled from internal records
Note 2: Electric rates require approval by the Tennessee Valley Authority
62
Morristown Utilities Commission
Schedule of Water Rates (Last Ten Years)
Fiscal years 2015 - 2006
2015
Inside City Rate
Customer charge per month
Commodity charge (per 1,000 gallons)
First 25,000 gallons
Over 25,000 gallons
First 50,000 gallons
Next 50,000 gallons
Over 100,000 gallons
Minimum bill
5/8” meter
3/4” meter
1” meter
1 1/2" meter
2” meter
3” meter
4” meter
6” meter
8” meter
Outside City Rate
Customer charge per month
Commodity charge (per 1,000 gallons)
First 25,000 gallons
Over 25,000 gallons
First 50,000 gallons
Next 50,000 gallons
Over 100,000 gallons
$
4.65
2014
$
4.65
2013
$
4.65
2012
$
4.65
2011
$
4.65
2010
$
4.65
2009
$
4.65
2008
$
4.65
2007
$
4.65
2006
$
4.65
2.05
1.80
1.60
2.05
1.80
1.60
2.05
1.80
1.60
2.05
1.80
1.60
2.05
1.80
1.60
2.05
1.80
1.60
1.90
1.65
1.45
1.55
1.30
1.10
1.55
1.30
1.10
1.55
1.30
1.10
8.75
9.25
10.00
11.50
16.00
61.00
71.00
101.00
114.30
8.75
9.25
10.00
11.50
16.00
61.00
71.00
101.00
114.30
8.75
9.25
10.00
11.50
16.00
61.00
71.00
101.00
114.30
8.75
9.25
10.00
11.50
16.00
61.00
71.00
101.00
114.30
8.75
9.25
10.00
11.50
16.00
61.00
71.00
101.00
114.30
8.75
9.25
10.00
11.50
16.00
61.00
71.00
101.00
114.30
8.45
8.95
9.70
11.20
15.70
60.70
70.70
100.70
-
7.75
8.25
9.25
10.75
15.25
52.00
70.00
100.00
-
7.75
8.25
9.25
10.75
15.25
52.00
70.00
100.00
-
7.75
8.25
9.25
10.75
15.25
52.00
70.00
100.00
-
4.65
4.65
4.65
4.65
4.65
4.65
4.65
4.65
4.65
4.65
4.10
3.60
3.20
4.10
3.60
3.20
4.10
3.60
3.20
4.10
3.60
3.20
4.10
3.60
3.20
4.10
3.60
3.20
3.80
3.30
2.90
3.10
2.60
2.20
3.10
2.60
2.20
3.10
2.60
2.20
63
Morristown Utilities Commission
Schedule of Water Rates (Last Ten Years) (continued)
Fiscal years 2015 - 2006
2015
Outside City Rate (continued)
Minimum bill
5/8” meter
3/4” meter
1” meter
1 1/2” meter
2” meter
3” meter
4” meter
6” meter
8” meter
Monthly private fire protection service charge
4”
6"
8”
10”
12”
$
12.85
13.35
14.10
15.60
20.10
65.10
75.10
105.10
118.40
25.00
40.00
50.00
100.00
125.00
2014
$
12.85
13.35
14.10
15.60
20.10
65.10
75.10
105.10
118.40
25.00
40.00
50.00
100.00
125.00
2013
$
12.85
13.35
14.10
15.60
20.10
65.10
75.10
105.10
118.40
25.00
40.00
50.00
100.00
125.00
Note 1: Compiled from internal records
64
2012
$
12.85
13.35
14.10
15.60
20.10
65.10
75.10
105.10
118.40
25.00
40.00
50.00
100.00
125.00
2011
$
12.85
13.35
14.10
15.60
20.10
65.10
75.10
105.10
118.40
25.00
40.00
50.00
100.00
125.00
2010
$
12.85
13.35
14.10
15.60
20.10
65.10
75.10
105.10
118.40
25.00
40.00
50.00
100.00
125.00
2009
$
2008
2007
2006
12.25
12.75
13.50
15.00
19.50
64.50
74.50
104.50
-
$ 10.85
11.35
12.10
13.60
18.10
63.10
73.10
103.10
-
$ 10.85
11.35
12.10
13.60
18.10
63.10
73.10
103.10
-
$ 10.85
11.35
12.10
13.60
18.10
63.10
73.10
103.10
-
25.00
40.00
50.00
100.00
125.00
25.00
40.00
50.00
100.00
125.00
25.00
40.00
50.00
100.00
125.00
25.00
40.00
50.00
100.00
125.00
Morristown Utilities Commission
Schedule of Wastewater Rates (Last Two Years)
Fiscal years 2015 to 2014
2015
Inside City Rate
Customer charge per month
Commodity charge (per 1,000 gallons)
Over 10,000,000 gallons
$
2014
9.17
$
5.00
Outside City Rate
Customer charge per month
Commodity charge (per 1,000 gallons)
Over 10,000,000 gallons
$
18.34
5.00
$
10.00
Note 1: The Commission assumed the operations of the Wastewater System as of December 30, 2013.
65
9.17
18.34
10.00
Morristown Utilities Commission
Schedule of Monthly Broadband Rates (Last Ten Years)
Fiscal years 2015 - 2006
Service
Standard Cable:
Expanded basic
Digital basic
Digital basic + 1
Digital basic + 2
Digital basic + 4
Premium channels
2015
$
Internet:
Residential
Tier 1
Tier 2
Tier 3
Tier 4
Tier 5
Commercial
Tier 1
Tier 2
Tier 3
Tier 4
Tier 5
Tier 6
Telephone:
Residential
BasicPack
PreferredPack
Additional services
Long distance rate per minute
Commercial
Access Line
Business Local Telephone Service
Additional services
Long distance rate per minute
2014
56.95
68.95
78.75
86.95
99.95
11.95-16.35
$
2013
50.95
60.95
69.95
77.95
90.95
9.95-12.95
$
2012
46.95
54.95
63.95
71.95
84.95
9.95-12.95
$
46.95
54.95
63.95
71.95
84.95
9.95-12.95
2011
$
46.95
54.95
63.95
71.95
84.95
9.95-12.95
2010
$
46.95
54.95
63.95
71.95
84.95
9.95-12.95
2009
$
41.95
49.95
59.95
67.95
80.95
9.95-11.95
2008
$
41.95
49.95
59.95
67.95
80.95
9.95-11.95
2007
$
41.95
49.95
59.95
67.95
80.95
9.95-11.95
2006
$
41.95
49.95
59.95
67.95
80.95
9.95-11.95
34.95
39.95
75.95
-
34.95
39.95
74.95
-
34.95
39.95
74.95
99.95
-
34.95
39.95
44.95
74.95
99.95-199.95
34.95
39.95
59.95
99.95
159.95
34.95
39.95
59.95
99.95
159.95
29.95
39.95
59.95
99.95
-
29.95
39.95
59.95
99.95
-
29.95
39.95
59.95
99.95
-
29.95
39.95
59.95
99.95
-
49.95
79.95
104.95
154.95
-
44.95
74.95
99.95
149.90
-
44.95
74.95
99.95
149.95
199.95
299.95
44.95
74.95
99.95
149.95
199.95
-
44.95
74.95
99.95
149.95
199.95
-
44.95
74.95
99.95
149.95
199.95
-
39.95
74.95
99.95
149.95
199.95
-
39.95
74.95
99.95
149.95
199.95
-
39.95
74.95
99.95
149.95
-
39.95
74.95
99.95
149.95
-
22.95
25.00
3.79-11.95
0.05
22.95
25.00
3.75-11.95
0.05
22.95
25.00
3.75-11.95
0.05
22.95
25.00
3.75-11.95
0.05
22.95
25.00
3.75-8.95
0.05
22.95
25.00
3.75-8.95
0.05
22.95
25.00
3.75-8.95
0.05
22.95
25.00
3.75-8.95
0.05
22.95
25.00
3.75-8.95
0.05
22.95
25.00
3.75-8.95
0.05
25.95
36.95
7.95-27.95
0.05
25.95
36.95
7.95-27.95
0.05
25.95
36.95
7.95-27.95
0.05
25.95
36.95
7.95-27.95
0.05
25.95
36.95
6.95-25.95
0.05
25.95
36.95
6.95-25.95
0.05
25.95
36.95
6.95-25.95
0.05
25.95
36.95
6.95-25.95
0.05
25.95
36.95
6.95-25.95
0.05
25.95
36.95
6.95-25.95
0.05
Note 1: Compiled from internal records.
Note 2: The Broadband System began operations in 2006.
66
Morristown Utilities Commission
Schedule of Power System Principal Customers
Current Year and Nine Years Prior
2015
Name
Inteplast Bags & Film Corp (formerly Vifan USA, Inc.)
2006
Percentage
of Gross
Rank Revenues
Annual
Revenues
Annual
Revenues
Percentage
of Gross
Rank Revenues
$ 3,901,226
1
5.01%
$ 1,818,774
4
3.30%
Mahle Manufacturing Co.
3,854,447
2
4.95%
3,236,309
1
5.80%
Rich Products Corporation
2,677,825
3
3.44%
JTEKT Automotive Morristown-Tennessee Inc.
2,631,951
4
3.38%
2,113,988
2
3.80%
Meritor Automotive
2,278,605
5
2.93%
2,051,137
3
3.70%
ColorTech
1,151,867
6
1.48%
Colgate Palmolive
1,066,704
7
1.37%
Team Technologies
1,039,477
8
1.34%
Sonoco Flexible
875,529
9
1.12%
Otics USA Inc
824,344
10
1.06%
Vacumet Corp.
-
-
847,690
5
1.50%
Lear Seigler, Inc.
-
-
756,263
6
1.40%
General Electric Co.
-
-
-
643,189
7
1.20%
AP&P Manufacturing Inc.
-
-
-
628,537
8
1.10%
Berkline
-
-
-
566,668
9
1.00%
J.W. Allen
-
-
493,788
10
0.90%
Note 1: Compiled from internal records
67
-
-
Morristown Utilities Commission
Schedule of Water System Principal Customers
Current Year and Nine Years Prior
##
2015
Annual
Revenues
Name
Russellville-Whitesburg Utility District
$
2006
Rank
Percentage
of Gross
Revenues
Annual
Revenues
Percentage
of Gross
Rank Revenues
1,079,042
1
15.67%
$ 471,613
2
8.80%
Alpha Talbott Utility District
908,126
2
13.19%
493,715
1
9.20%
Koch Foods
563,044
3
8.18%
426,423
3
8.00%
Bean Station Utility District
496,051
4
7.20%
272,957
4
5.10%
Mahle
139,262
5
2.02%
68,508
6
1.30%
Rich Products
121,302
6
1.76%
-
Morristown Hamblen Hospital
78,130
7
1.13%
-
Colgate Palmolive
74,761
8
1.09%
-
Inteplast Bags & Film Corp (formerly Vifan USA, Inc.)
61,356
9
0.89%
-
JTEKT Automotive Morristown-Tennessee Inc.
48,216
10
0.70%
-
South Morristown Utility District
-
-
-
79,828
5
1.50%
J.W. Allen
-
-
-
47,826
7
0.90%
Morristown Housing Authority
-
-
-
37,416
8
0.70%
City of Morristown
-
-
-
36,318
9
0.70%
34,055
10
0.60%
Lensing Fibers
Note 1: Compiled from internal records
68
Morristown Utilities Commission
Schedule of Wastewater System Principal Customers
Current and Prior Fiscal Years
2015
Name
Koch Foods
Annual
Revenues
2014
Percentage
of Gross
Rank Revenues
Annual
Revenues
Rank
Percentage
of Gross
Revenues
$ 2,092,260
1
16.03%
$ 2,500,776
1
19.12%
Rich Products Corporation
612,754
2
4.69%
497,132
2
3.80%
Colgate Palmolive
412,334
3
3.16%
378,625
3
2.90%
Morristown Housing Authority
176,726
4
1.35%
180,636
4
1.38%
Hamblen County Board of
Education
161,852
5
1.24%
146,647
5
1.12%
Morristown Hamblen Hospital
155,039
6
1.19%
138,646
6
1.06%
Meritor Automotive
87,867
7
0.67%
85,515
7
0.65%
Hamblen County Justice
Center
87,749
8
0.67%
81,673
8
0.62%
Lakeway Regional Hospital
72,799
9
0.56%
79,686
9
0.61%
Heritage Center
70,618
10
0.54%
74,264
10
0.57%
Note 1: Compiled from internal records
Note 2: The Commission assumed the assets, liabilities and operations of the Wastewater System
as of December 30, 2013.
69
Morristown Utilities Commission
Schedule of Employees by System (Last Ten Years)
Fiscal years 2015 - 2006
Fiscal
Year
Power
Water
Wastewater
Broadband
Total
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
84
78
71
73
75
74
67
69
73
73
21
21
22
19
19
18
19
19
18
20
17
16
-
18
21
24
21
17
15
14
14
13
9
140
136
117
113
111
107
100
102
104
102
Note 1: Compiled from internal records.
Note 2: Broadband operations commenced in 2006.
Note 3: The Commission assumed the assets, liabilities and operations of the
Wastewater System as of December 30, 2013.
70
AWWA Free Water Audit Software:
Reporting Worksheet
?
Click to access definition
+
Click to add a comment
WAS v5.0
American Water Works Association.
Copyright © 2014, All Rights Reserved.
Water Audit Report for: Morristown Utilities Commission (0000474)
Reporting Year:
2015
7/2014 - 6/2015
Please enter data in the white cells below. Where available, metered values should be used; if metered values are unavailable please estimate a value. Indicate your confidence in the accuracy of the
input data by grading each component (n/a or 1-10) using the drop-down list to the left of the input cell. Hover the mouse over the cell to obtain a description of the grades
All volumes to be entered as: MILLION GALLONS (US) PER YEAR
To select the correct data grading for each input, determine the highest grade where
the utility meets or exceeds all criteria for that grade and all grades below it.
Master Meter and Supply Error Adjustments
<----------- Enter grading in column 'E' and 'J' ---------->
WATER SUPPLIED
Volume from own sources: +
Water imported: +
Water exported: +
?
9
?
?
3,123.907 MG/Yr
0.000 MG/Yr
0.000 MG/Yr
+
?
+
?
+
?
3,062.654 MG/Yr
WATER SUPPLIED:
9
Pcnt:
2.00%
Value:
MG/Yr
MG/Yr
MG/Yr
Enter negative % or value for under-registration
Enter positive % or value for over-registration
.
AUTHORIZED CONSUMPTION
?
10
Billed metered: +
2,786.965 MG/Yr
?
n/a
Billed unmetered: +
0.000 MG/Yr
?
10
Unbilled metered: +
1.529 MG/Yr
?
9
38.283 MG/Yr
Unbilled unmetered: +
Default option selected for Unbilled unmetered - a grading of 5 is applied but not displayed
AUTHORIZED CONSUMPTION:
?
Click here:
for help using option
buttons below
Pcnt:
1.25%
235.877 MG/Yr
WATER LOSSES (Water Supplied - Authorized Consumption)
Apparent Losses
?
10
Unauthorized consumption: +
7.657 MG/Yr
Default option selected for unauthorized consumption - a grading of 5 is applied but not displayed
?
10
Customer metering inaccuracies: +
28.167 MG/Yr
5
?
Systematic data handling errors: +
6.967 MG/Yr
Default option selected for Systematic data handling errors - a grading of 5 is applied but not displayed
Apparent Losses:
?
42.791 MG/Yr
Real Losses (Current Annual Real Losses or CARL)
Real Losses = Water Losses - Apparent Losses:
?
193.086 MG/Yr
MG/Yr
Use buttons to select
percentage of water
supplied
OR
value
2,826.777 MG/Yr
?
Value:
Pcnt:
0.25%
Value:
MG/Yr
1.00%
0.25%
MG/Yr
MG/Yr
235.877 MG/Yr
WATER LOSSES:
NON-REVENUE WATER
NON-REVENUE WATER:
275.689 MG/Yr
?
= Water Losses + Unbilled Metered + Unbilled Unmetered
SYSTEM DATA
Length of mains: +
Number of active AND inactive service connections: +
Service connection density:
?
5
?
7
275.0 miles
13,800
50 conn./mile main
?
Are customer meters typically located at the curbstop or property line?
Yes
(length of service line, beyond the property
?
Average length of customer service line: +
ft
boundary, that is the responsibility of the utility)
Average length of customer service line has been set to zero and a data grading score of 10 has been applied
Average operating pressure: +
4
65.0 psi
?
COST DATA
Total annual cost of operating water system: +
Customer retail unit cost (applied to Apparent Losses): +
Variable production cost (applied to Real Losses): +
?
10
?
10
?
10
$5,915,976 $/Year
$2.05 $/1000 gallons (US)
Use Customer Retail Unit Cost to value real losses
$517.62 $/Million gallons
WATER AUDIT DATA VALIDITY SCORE:
*** YOUR SCORE IS: 89 out of 100 ***
A weighted scale for the components of consumption and water loss is included in the calculation of the Water Audit Data Validity Score
PRIORITY AREAS FOR ATTENTION:
Based on the information provided, audit accuracy can be improved by addressing the following components:
1: Volume from own sources
2: Unauthorized consumption
3: Systematic data handling errors
AWWA Free Water Audit Software v5.0
71
Reporting Worksheet
71
Morristown Utilities Commission
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2015
Federal Grantor / Pass-Through Grantor
CFDA
Number
Contract
Number
66.458
CS470001XX
Federal
Expenditures
Federal Awards
Environmental Protection Agency, Office of Water
Through TN Department of Environment and Conservation
TOTAL FEDERAL AWARDS
$
4,361,604
$
4,361,604
Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards summarizes the expenditures of the Commission under programs of the federal
governments for the year ended June 30, 2015. The schedule is presented on an accrual basis of accounting.
Cash Receipts
Morristown Utility Commission received reimbursements under Contract Number CS470001XX for the following qualifying expenditures during the year
ended June 30, 2015:
Expenditures incurred prior to July 1, 2014
$
426,214
Expenditures incurred from July 1, 2014 - June 30, 2015
2,051,818
$ 2,478,032
72
Report of Independent Auditors on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
Board of Commissioners
Morristown Utilities Commission
We have audited, in accordance with the auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States, the financial statements of the
Power System, Water System, Wastewater System and Broadband System (collectively, the
Systems), enterprise funds of the City of Morristown, Tennessee, as of and for the year ended
June 30, 2015, and the related notes to the financial statements, which collectively comprise the
Systems’ basic financial statements, and have issued our report thereon dated December 1, 2015.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Systems’
internal control over financial reporting (internal control) to determine the audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the Systems’
internal control. Accordingly, we do not express an opinion on the effectiveness of the Systems’
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a
material misstatement of the Systems’ financial statements will not be prevented, or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies and therefore, material weaknesses or significant
deficiencies may exist that were not identified. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
73
Board of Commissioners
Morristown Utilities Commission
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Systems’ financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly,
we do not express such an opinion. The results of our tests disclosed an instance of noncompliance
that is required to be reported under Government Auditing Standards and which is described
below:
The Commission entered an installment purchase contract providing for twelve quarterly
payments of $16,286 for the hardware, software and licensing of a new flash storage system
prior to approval by the City of Morristown City Council (the City). TCA 7-51-904 provides,
in part, that such contracts be approved by resolution or ordinance of the governing body of
the municipality prior to entering the agreement. The City subsequently approved the
contract.
We recommend the Commission develop procedures to ensure all contracts are a reviewed
for compliance with relevant state and local statutes prior to their execution.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
Systems’ internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the Systems’ internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Coulter & Justus, P.C.
December 1, 2015
Knoxville, Tennessee
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Report of Independent Auditors on Compliance for Each Major Program and on
Internal Control Over Compliance Required by OMB Circular A-133
Board of Commissioners
Morristown Utilities Commission
Report on Compliance for Each Major Program and Passenger Facility Charge Program
We have audited the Morristown Utilities Commission’s (the Commission’s) (consisting of the
Power System, Water System, Wastewater System and Broadband System, enterprise funds of the
City of Morristown, Tennessee) compliance with the types of compliance requirements described
in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect
on the Commission’s major federal program for the year ended June 30, 2015. The Commission’s
major federal program is identified in the summary of auditor’s results section of the
accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts
and grants applicable to its federal program.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for the Commission’s major federal
program based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular
A-133, Audits of States, Local Governments and Non-Profit Organizations. Those standards and
OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance
about whether noncompliance with the types of compliance requirements referred to above that
could have a direct and material effect on a major federal program occurred. An audit includes
examining, on a test basis, evidence about the Commission’s compliance with those requirements
and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for the major
federal program. However, our audit does not provide a legal determination of the Commission’s
compliance.
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Board of Commissioners
Morristown Utilities Commission
Opinion on the Major Federal Program
In our opinion, the Commission complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on its major federal
program for the year ended June 30, 2015.
Report on Internal Control Over Compliance
Management of the Commission is responsible for establishing and maintaining effective internal
control over compliance with the types of compliance requirements referred to above. In planning
and performing our audit of compliance, we considered the Commission’s internal control over
compliance with the types of requirements that could have a direct and material effect on the major
federal program to determine the auditing procedures that are appropriate in the circumstances for
the purpose of expressing an opinion on compliance for the major program and to test and report
on internal control over compliance in accordance with OMB Circular A-133, but not for the
purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of the Commission’s internal
control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected, on
a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance
requirement of a federal program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control
over compliance that might be material weaknesses or significant deficiencies. We did not identify
any deficiencies in internal control over compliance that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other
purpose.
Coulter & Justus, P.C.
December 1, 2015
Knoxville, Tennessee
76
Morristown Utilities Commission
Schedule of Findings and Questioned Costs
Year ended June 30, 2015
Section I -- Summary of Auditors’ Results
Financial Statements
Type of auditors’ report issued:
Unmodified
Internal control over financial reporting:
Material weakness(es) identified?
None reported
Significant deficiency(s) identified not
considered to be material weaknesses?
None reported
Noncompliance material to financial statements:
None reported
Federal Awards
Internal control over major programs:
Material weakness(es) identified?
Significant deficiency(s) identified not
considered to be material weaknesses?
None reported
Type of auditors’ report issued on compliance
for major programs:
Unmodified
Any audit findings disclosed that are required
to be reported in accordance with
Circular A-133, Section 510(a)?
None reported
Identification of major programs:
CFDA
Name of Program
66.458
Capitalization Grants for Clean
Water State Revolving Funds
None reported
Dollar threshold used to distinguish between
Type A and Type B programs:
$300,000
Auditee qualified as low-risk auditee?
No
Section II -- Financial Statement Findings
None reported.
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Morristown Utilities Commission
Schedule of Findings and Questioned Costs (continued)
Year ended June 30, 2014
Section III -- Federal Award Findings and Questioned Costs
None reported.
Section IV -- Summary Schedule of Prior Year Audit Findings
None reported.
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