UTOPIA’s 2011 Audit Report

UTOPIA’s 2011 audit report (PDF) has come out, and the Utah Taxpayers Association wasted no time in butchering their “analysis” of it. (If you need a good piece of fiction, go find their January 2012 newsletter; I won’t grace it with a link.) Their overeagerness to once again trash UTOPIA, however, means they ignored basic math and did zero fact-checking, but we’re all used to that by now, aren’t we?

The golden ray of sunshine in the report is a jump in total revenues of 98.7% over the prior year while expenditures dropped 7.2%. (The UTA chose to focus on just operating revenues and omitted the information about dropping costs.) Saying that this is a huge improvement is an understatement, especially when this doesn’t include any of the new UIA subscribers in the mix. While there was a small drop in total subscribers (a net loss of 210 thanks to the Prime Time meltdown), the period from July 1 to December 31 netted an additional 1400 subscribers via the UIA. This isn’t included in the audit report since 1) the audit report covers the period from June 30 2010 to June 30 2011 and 2) all new residential subscribers are being brought on via the UIA and will be included in a separate audit report beginning next year.

Since the UTA really can’t spin a good story concerning the revenues and expenditures, they chose instead to attack on the assets front. You may recall that part of UTOPIA’s bond structure is to use credit swaps to help stabilize the interest paid on their variable rate bond. Essentially, they purchased bonds with a slightly lower interest rate than what they pay and use the interest revenue to help stabilize fluctuations in bond rates, paying only the spread between the two. When UTOPIA’s audits are performed, it has to take into account all liabilities including the cost of these bonds they own. This creates the perception of decreased net assets even though UTOPIA won’t be selling those bonds until pay off their own bond. In short, it’s a paper liability that doesn’t actually cost them anything until almost three decades from now. The UTA, however, did not talk to UTOPIA to ask about this situation, instead choosing to assume the worst.

According to UTOPIA, they are currently ahead on their projections for revenues and slightly behind on total subscribers, about a wash. The first year of their five-year plan focused most heavily on existing service areas, areas where picking up additional subscribers would be relatively low-cost. Year 2 is going to focus more heavily on getting additional areas hooked up, so make sure you’re registering your interest on their website.

So the short of it is that UTOPIA has posted huge increases in revenues, a modest decrease in expenditures, and it well on-track to sign up thousands of new customers by the time their current fiscal year closes. If that’s not success, I don’t know what is.

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