There are two important matters I want to address that affect the customers of Beaufort-Jasper Water and Sewer Authority. First, I want to apologize to our customers for the long wait times on our phone system. I realize that this is a very frustrating situation and certainly does not reflect the priority we place on serving our customers.
Last month we moved to a new billing system and many customers are calling with questions about the new bill format. This has resulted in higher than normal call volumes into our call center. Unfortunately, we lost several Customer Service staff at the same time. As you can imagine, this combination of an increased service demand from a smaller staff led to the situation you experienced. We expect to have the bill format problem solved within a very short time and we have hired three new Customer Service Representatives.
While this explanation of our problems does not excuse the situation, I hope you will believe that we are committed to providing excellent customer service and are working to restore your confidence in our organization.
Secondly, given the unsettled financial and credit markets, I want to provide you with a brief assessment of any effects this situation may have on BJWSA.
Security of Deposits: As banks fail, many depositor accounts are at risk. Our deposits are safe as long as the US Treasury is viable.
All BJWSA bank deposits above the FDIC insurance limits must be collateralized. This means that for every dollar we have on deposit, the bank must purchase equivalent amounts of US Treasury instruments and hold them in our name in trust. If the bank should fail, the collateral becomes ours. Variable Rate Debt: As you may have read in the national press, many local governments and utilities are in trouble because they issued variable-rate debt involving exotic instruments (Collateralized Mortgage Obligations, SWAPS, derivatives, etc.). As long as the market was up, the interest rate that the utility paid was low. However, some utilities have seen their interest rates go from 3% to 11% overnight as the market turned down. We are not exposed to this risk.
All BJWSA debt is fixed-rate and fixed long-term. We can absolutely predict our annual debt payments over the life of each loan and our average interest rate is 5%.
Our debt instruments are “plain vanilla” and traditional. While there is no upside potential interest rate gain, there is also no potential downside risk. Frozen Credit Markets: Hundreds of local governments are unable to access credit either through bond issues for long term needs or short term loans for operations. Many planned bond issues have been put on hold because there is no way to predict the interest rate that the entity would have to pay to attract purchasers. We are not currently affected by this situation since we do not plan to issue bonds until FY 2013 and we do not borrow for operations.
These are complex times for everyone. BJWSA has protected itself and its customers from serious financial risks and we pledge that we will solve this frustrating problem with our call center as quickly as it can be done. We ask for your understanding. Dean Moss