Duck River reservoir is seen here in April 2016

Editor’s Note: This story has been updated to clarify the water board had a $4.4 million increase in net position — which encompasses the utilities’ overall financial standing covering operating and non-operating revenues and expenses, including debt. It also notes that the board’s cash went down by $294,118. 

The city water board ended 2016 with a nearly $4.4 million change in net position while paying nearly $5 million on debt.

The City of Cullman Water Utilities Board sold more water last year— netting almost $2.6 million in additional water sales, according to the audit performed by Cullman accounting firm Fricke, Sweatmon and Miller. 

In total, the water department produced nearly 3.86 million gallons, with an average daily production of more than 9.8 million gallons. That’s up from the 3.49 million gallons it produced in 2015, with an average daily production of 9.56 million.

While water sales were up, the board’s cash went down by $294,118 in 2016, said City Clerk Wes Moore. 

According to the audit, Cullman’s wholesale rate (the price it sells its water to other utilities) for fiscal year 2016 was $2.72 per 1,000 gallons. Last April, officials said an incremental wholesale rate increase plan would gradually raise rates to $2.55 in 2016, $3.39 in 2017, $3.46 in 2018 and $3.53 in 2019 and $3.60 by 2020. Those projections are in line with initial projections related to debt service from the dam project.

“You hate to see costs go up, but it’s needed to pay for the additional water source,” Cullman Mayor Woody Jacobs said.

Higher rates are funding the massive $110 million Duck River Reservoir which is now essentially full. But the major work that lays ahead is getting that water out of the lake and to the city’s treatment plant.

Jacobs said the pipeline project is set to go to bid in May and it will take about a year to build a pump station. In the meantime, the lake water will undergo testing before its pumped into the plant for treatment.

Projections have the city’s wholesale rate climbing to approximately $3.60 per 1,000 gallons by 2020, with incremental annual increases. The projections are in line with initial estimates related to debt service from the dam project.

The board’s annual income is not based on the wholesale rate for water established by the City of Cullman’s contracts with its customers. It’s calculated by an independent engineering firm and the utility board’s audited financial statements.

Every wholesale customer, including the City of Cullman, pays the same cost for water and all costs associated with distributing water to the wholesale customers are included in the adjustment.

The city’s retail water rates are as follows: $7.75 per 1,000 gallons over minimum plus $31 with 4 percent tax ($1.24) inside the city limits and $9.75 per 1,000 gallons over minimum plus $39 with 4 percent tax ($1.56) for outside the city limits.

Independent auditors found no issues with the board’s finances in its annual review.

Operating expenses were only up slightly — to $3,554,096 from 2015’s $3,379,865 — but a bulk of that came from higher contracted services.

Overall, the board ended 2016 with a net position of $26.6 million, up from the $22.4 million in the prior year.

The water board manages a system that includes the 543-acre Lake Catoma, 24 million gallon-per-day water filtration plant, three 2 million gallon clear wells, a sludge removal system, raw water and finished water pumping stations and a chlorine containment building.

The board is composed of Chairman Wayne Fuller, Steven Murphree, Councilmen Johnny Cook and Garlan Gudger Jr. and Jacobs.

 Tiffeny Owens can be reached at 256-734-2131, ext. 135.