Flat revenues in the past four to five years coupled with increasing costs produced what Hope Water and Light Corp. General Manager Jim Kirchhoff called Friday a “flat” budget for 2013, but will include costs for a rate study for a likely adjustment to rates in 2014. The HWL governing board approved the balanced budget which is based upon projected gross revenues from electrical and water utility services of about $23.8 million for the year. Kirchhoff said much of the budget reflects something of a holding pattern for HWL over the past five years. “We had hoped to see a steady growth in operating revenue, which is based primarily on commodity sales, but that is not the case,” he said. Those sales are generated mainly through bulk power and water purchases mainly for industrial customers. “We have yet to feel the 12 month impact of Amerities and New Millennium Building Systems but assume both industries will add significantly to kilowatt hour sales,” Kirchhoff said. Both industrial customers have been start-ups in Hope within the past five years. “With commodity sales remaining flat against increasing costs related to production and distribution of services, we have continued to make serious cuts in our expenses in order to provide a balanced budget, but it appears we have done about all we can do under the circumstances,” Kirchhoff said. Gross power purchases by HWL from its wholesale supplier AEP/Southwestern Electric Power Co. have fallen since 2005, he said. HWL purchased 324 million kilowatt hours in 2005, compared with 285 million kwh in 2009, 299 million kwh in 2011 and 298 million kwh in 2012, Kirchhoff said. By comparison, the number of residential customer meters served by HWL fell from 5,754 in 2011 to 5,715 in 2012, while all classes of meters served by HWL fell from 9,291 in 2011 to 9,282 in 2012, a virtual standstill, Kirchhoff said. As a result, Kirchhoff said HWL has been forced into a maintenance mode as it must typically capitalize expenditures for certain equipment and supplies that are used in an ongoing fashion at a time when purchased power costs are more than half of the budget at $16.2 million and capital costs have been reduced to about $1.1 million. That doesn't leave a great deal of operating room, he said. “We have decreased our capital expenditures to the point that we're concerned about our ability to provide the level of service our customers deserve and expect because we are not improving and updating our systems,” Kirchhoff said. He said an example of the need is computer system upgrades which HWL needs to manage customer billing; while not incorporated into the 2013 budget, HWL is laying plans to make the upgrade, which will have immediate benefits to customers, according to Kirchhoff, in providing direct internet access to billing and account management for customers. “We need to go to the next version,” he said. In addition, HWL will need to study the need to upgrade its metering system “down the road,” Kirchhoff said. “We're going to have a rate study performed this year to analyze what we need to do going forward,” he said. “But, there will not be any increase in rates related to this budget.” He said the $60,000 study will require several months to complete. “Our intent is to spend several months accumulating data, performing the study, and developing rates to be implemented at the first of the year in 2014,” Kirchhoff said. The budget does include a two percent cost of living wage increase for all HWL employees, with an additional one percent set aside for merit increases, he said, which will cost a total of $83,300 in the budget, including benefits costs.