Making Changesfor the FutureHuntsville Utilities2011 Annual Report

HUNTSVILLE UTILITIES112 Spragins Street

Huntsville, Alabama 35801(256) 535-1200www.hsvutil.org

William C. PippinPresident and Chief Executive Officer

Jay C. StoweChief Operating Officer

Theodore PhillipsChief Financial Officer

Steve WrightElectric Manager

Jimmie ButlerNatural Gas and Water Operations Manager

Anthony F. OwensWater Supply Manager

Anna ParvinCustomer Services Manager

Ron McLeroyTechnical Services Manager

David ChampignyMIS Director

Keith MoranController

Janice CapshawHuman Resources Director

Ron RizzardiInternal Audit Director

Larry DenmanCommunity Relations Superintendent

Bill YellCommunications Director

Mike CornettSafety & Security Director

WWATER

Use of FundsTotal $49,300,735.18

Construct. Mater.2%

Purchased Commodity61%

Materials:Non-Stock

1%

Warrant Principal1%

Tax Equivalents

6%

Other Cap. Purch.2%

Other Expenses11%

Debt Service Expense1%

Payroll15% Source of Funds

Total $28,061,616.77

Rental Income0%

Residential Sales47%

Large Commercial2%

Hydrant/Lighting7%

Medium Commercial7%

Small Commercial15%

Large Industrial1%

Small Industrial5%ATC

6%

Other10%

Use of FundsTotal $32,070,503.68

Construct. Mater.6%

Purchased Commodity9%

Tax Equivalents4%

Other Cap. Purch.5%

Other Expenses25%

Debt Service Expense6%

Payroll32%

Warrant Principal7%

Materials:Non-Stock

6%

Making Changesfor the Future

Huntsville Utilities2011 Annual Report

Table of ContentsWelcome ................................................................................Page 2Board Members and Management ..........................................Page 3Electric Department ................................................................Page 4Natural Gas Department..........................................................Page 6Water Department ..................................................................Page 8Customer Services..................................................................Page 10Our Employees ....................................................................Page 12Administrative Services ..........................................................Page 14Special Section: April 27, 2011................................................Page 16Customer Growth Charts ........................................................Page 20Financial Statements ............................................................Page 21Funding Charts ......................................................................Page 76

Friends and neighbors,At the beginning of FY2011, no onecould have dreamed of the changesthat would take place during the com-ing year.Huntsville Utilities was on the road toimplementing one of the biggestchanges in its history as the new Cus-tomer Information System project pro-ceeded and a Go Live was scheduledfor the spring of 2011.Another change would come in theform of combining the Water and Nat-ural Gas Operations Departments.

This merger allows cross training of staff which provides more flexibilityin utilizing manpower and skills. This action will improve service and reli-ability.Perhaps the biggest change of all would be one that caught everyoneliterally by surprise. This would be the change in mind sets as Huntsvilleexperienced its first complete loss of electric power ever. As the weatherevents of April 27, 2011, unfolded, Huntsvillians found out what it waslike to feel helpless, for many the first time.Now donʼt misunderstand. Huntsville has had its share of tragedy. Someof the historical instances have been brought by Mother Natureʼs fury,and some have been manmade. But never before has the communityfound itself plunged into total darkness.It is with great pride that I take a moment to reflect upon the events thatwould occur over the next few weeks. Anyone who lives here witnessedthe kindness and concern that unfolded as neighbors reached out to

help one another. Businesses opened their doors to help those in need,and the community rallied with a spirit that was warm, kind, and gener-ous.It is hard to put into words how extremely proud I am of the employeesof Huntsville Utilities. From the Electric Crews who worked in 12-hourshifts, round the clock, to the Customer Service Representatives whoanswered phones and consoled scared customers, the need to help thecommunity recover was felt everywhere in the company.Water crews drove around the water system hooking generators up towater booster stations so clean, quality water remained available. Natu-ral gas crews and Stores Department employees worked round theclock delivering poles, transformers, wire … whatever supplies the elec-tric crews needed to complete their tasks.For years Huntsville Utilitiesʼ employees have been held in high respectfor the work they have done under extremely adverse conditions whentraveling to help others in areas torn apart by hurricanes and tornados.These experiences proved vital training grounds as Huntsville Utilitiesteamed with crews from Tuskegee, AL, Lake Worth and Lakeland, FL,and Pulaski, TN, to restore power and a sense of normalcy to the com-munities Huntsville Utilities serves.And the biggest change that occurred during 2011 was a deeper senseof responsibility to the community in every employee.We are proud to serve you.

William C. Pippin

2

Jay C. Stowe, PEChief Operating Officer

William C. PippinPresident, Chief Executive Officer

elcomeTheodore Phillips, CPA

Chief Financial Officer

City of Huntsville Electric, Natural Gas, and Water Systems

3

William M. JohnsonNatural Gas & Water Utility Boards Secretary

Dr. James S. Wall, Jr.Natural Gas & Water Utility Boards Chairman

J. Robert Miller, Esq.Natural Gas & Water Utility Boards

Attorney

Stanley StatumNatural Gas & Water Utility Boards

Vice-Chairman

D. Thomas WinsteadElectric Utility Board

Vice-Chairman

George A. Moore, Esq.Electric Utility Board Secretary

Ronald W. BolesElectric Utility Board Chairman

E. Cutter Hughes, Jr., Esq.Electric Utility Board

Attorney

Anna ParvinCustomer Services Manager

Steve WrightElectric Manager

Larry DenmanCommunity Relations

Superintendent

Janice CapshawHuman Resources Director

Bill YellCommunications Director

Anthony F. OwensWater Supply Manager

Jimmie ButlerNatural Gas and Water Operations Manager

Keith MoranController

Glenda WallerEEO/Organizational

Development Specialist

Lucreacia PointsEEO/Organizational

Development Specialist

Ron RizzardiInternal Audit Director

Ron McLeroyTechnical Services Manager

Mike CornettSafety & Security Director

oard Members & Management Team

2011 Annual Report

lectric DepartmentOne of the largest electric utilities on the Tennessee Valley Authorityʼs(TVA) distribution system, Huntsville Utilities is constantly monitoringservice, evaluating future needs, and delivering reliable power tocommunities within an 800-plus square mile service area.To achieve all of these goalsand remain dependable, theElectric Department mustremain open to makingchanges to improve ourservice.The largest responsibility ofthe Electric Department toHuntsville Utilitiesʼ customers

is the reliable delivery of power from substations to end-users. Thesystem is regularly reviewed and plans are made to build newsubstations or improve upon existing facilities. Some of the substation-

focused work completed during FY2011included equipment upgrades to the HuntsvillePrimary 12kV Substation in downtownHuntsville and energizing a new 100 mva161/46kV transformer at the Thornton PrimarySubstation in Research Park.A rebuild of the Farley Primary Substationplaced three new 100 mva, 161/46kV powertransformers into service. These new unitsreplaced a 1965 transformer and increased theservice capacity from 200,000 to 300,000kilowatts. Construction began on the newRedstone 161/46kV Substation being relocatedfor the City of Huntsville, as well as building a

temporarysubstation to feedthe new RedstoneGatewaydevelopment.In addition toupgrades andconstruction,substation crewsperformed an

Underground Facility Locations 31,156Aid-ToConstruction $3,200,492.31NewSubstations Completed 1Substations Upgraded 3Electric Customers* 171,058*Customer numbers counted by active contract accounts effective in May 2011.

Safety is a top priority in all companydepartments. The Electric Department formed ateam and developed an “Electric SafetyDemonstration Trailer.” The trailer is used toeducate the public, emergency responsepersonnel, and other utility personnel. In thepicture above, a lineman demonstrates why hissafety gear is regularly inspected. At left, aHuntsville Firefighters’ cadet class watches thedemonstration.

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City of Huntsville Electric, Natural Gas, and Water Systems

infrared scan on all substationsthis past year. Delivery pointswere scanned again duringsummer and winter peak-loadtime periods. Substation crewsalso performed oil analyses on allpower transformers. Thecommand functionality of theSCADA system was tested andrepairs made as needed on 313transmission and distributioncircuits. This action assuresremote commands arefunctioning properly for dailyswitching and emergencyconditions.Electric facilities were provided to several large industrial tracts inResearch and Thornton Industrial Parks. Work orders were alsocompleted for 781 residential lots in new subdivisions. Aid-To-Construction payments collected for providing utility service to newconstruction projects equaled $3,200,492.31.Inspections of 12,177 utility poles resulted in replacement of 1,166,

including poles shared by other utility agencies. Duringthe pole inspections, a variety of maintenance items werereported and corrected such as broken guy wires,insulators, and ground hardware. Poles inside substationswere also inspected including Gurley, Chase, andMeridian Street. Charity Lane and A&M Substations werealso inspected and repair work was begun which shouldbe completed during FY2012.In addition to future growth plans including substationconstruction and utilities for land development, HuntsvilleUtilities is making plans to install an electronic meterreading system. The multi-year project will replace older,mechanical meters with solid state meters, providingmore consistent meter readings in terms of timing andaccuracy. This improvement will eventually providecustomers with more detailed, timely informationregarding their energy consumption.To help strengthen communications with our SCADAradio equipment and the future meter reading technology,a fiber optic line will be run to the new Huntsville Hospitalfacility in Madison and then loop around Madison toRainbow Mountain. This will allow better coverage of theutilityʼs service area in this portion of the system.One of the results of a collaborative system evaluationbetween TVA and Huntsville Utilities, TVA has agreed toinvest up to $16,000,000 on transmission infrastructurealong the middle and northern part of the service territory.This will greatly enhance system capacity and provide analmost unlimited source of power for the next few

decades of growth. The first part of the project will include a new161kV transmission line north to the Charity Lane Substation.At Huntsville Utilities, change means improvement – improvingservice, improving reliability, and improving your daily experience withthe company. The Electric Department strives daily to make sure youhave the power you need to succeed at your goals. Making changesto improve our service includes planning for your success.

In November a backyarddigger derrick was addedto the Department’sequipment. This will allowcrews to install poles andother facilities in placeswhere trucks cannot go.In the picture below acrew member helps guidea pole through a carport.This particular work sitehas electrical utilitiesfeeding from a backyardright-of-way.

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2011 Annual Report

Huntsville Utilitiesʼ Natural Gas Department is a leader in makingchanges to improve service to customers. Not only does theNatural Gas Department strive daily to perform its work asefficiently and safely as possible, but during FY2011 the operationsdivision joined forces with the operations section of the WaterDepartment to cross-train. This action will increase efficiency andreliability for both utility sections.

Increasing service availability, the gas team installed 23,303 feet ofnew gas mains. Installation of 581 new service lines and 74,980feet of directional bores also added to availability. To updatesystem infrastructure already in place, 24,816 feet of cast ironmains and 293 feet of service lines were replaced. Toaccommodate roadwork and construction, 69 service lines wererelocated to ensure reliability within the gas system.At the close of FY2011, there was a total of 48,628 gas usagecustomers, a 1.8% increase over the previous year. HuntsvilleUtilities customers bought 4,894,202 mcf during the fiscal year,and the company transported 1,553,406 mcf for major industrialcustomers.Although providing reliable, quality service to our customers is ourtop priority, safety plays a significant role in accomplishing this

goal. The Natural Gas Departmentwas recognized by the AmericanPublic Gas Association (APGA) withthe 2011 APGA Safety ManagementExcellence Award. Each year oneAPGA member, out of over 700member companies, is recognizedfor innovative and effective safetyprograms. Receiving this awardreflects upon the efforts put in daily

atural Gas

Huntsville Utilitiesmaintains approximately100 miles of high-pressurenatural gas system pipelinefrom the west side ofMadison County thru to LakeGuntersville, southeast ofHuntsville. Pictured at left,crews in flame-retardantsuits, repair a leaking n-linepipeline insulator on theGuntersville end of the line.

Natural Gas Sold 4,894,202mcfNatural Gas Transported 1,553,406mcfDirectional Bores completed 74,980 feetNewGasMains 23,303 feetNewService Lines 581Natural Gas Customers* 48,628*Customer numbers counted by active contract accounts effective in May 2011.

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City of Huntsville Electric, Natural Gas, and Water Systems

by Gas Department personnel,supported by the Safety & SecurityDepartment, to ensure the safety ofcustomers as well as departmentmembers. The Gas Departmentalso celebrated its three-yearrunning record without a lost-time accident.When the Gas and Water Operations Departments werecombined, Natural Gas Department Manager Jimmie Butler tookthe lead of the newly formed Natural Gas/Water Department.Butler effectively led the Gas Department for eight years, buildingan impressive safety record including the State of AlabamaDepartment of Industrial Relations Workplace Safety Award ofSuperior Achievement.Huntsville Utilities has been very pro-active in leakdetection and prevention. During FY2011, the GasDepartment completed a three-year rotation surveyingolder gas mains and services and the first year of a five-year residential leak survey. Other leak surveyscompleted during the year included inspections of schoolsystem and downtown business district gas equipmentand lines.Going forward into FY2012, the gas team will continue tomake changes to improve the service provided to ourcustomers. A benefit of slow construction occurring

because of the economic slowdown is theability to replace aging infrastructure. DuringFY2012 the Natural Gas Department hasplanned to install 600 new service lines, add20,000 feet of new gas mains, replace 25,000feet of cast iron gas mains, and change out300 aging service lines. The gas team hasplanned to complete one system improvementproject during FY2012, year two of the Five-Year Capital Plan (New Hope ImprovementTie).By constantly monitoring the natural gasmarket and utilizing its hedging policy, theGas Supply team was able to maintainexisting rates for customers during the year.Although the main emphasis is on protectingcustomers from a dramatic rate increase, the

team investigates opportunities to provide lower rates forcustomers.The gas team works hard to obtain the fuel at the best prices andprovide service that is dependable and safe. The Departmentconstantly looks for ways to change work procedures to improvesafety. By merging and cross-training personnel between theWater and Natural Gas divisions in an effort to increase reliability,both departments are making changes to improve our service.

Updating the infrastructure includes replacingexisting pipelines in the older sections oftown. Pictured below a Gas Department crewexposes the old galvanized gas line andinserts a new yellow PE line through the pipe.At the house, another crew member fits thegalvanized pipe holding the PE line with newfittings and resets the meter.

Huntsville UtilitiesNatural Gas Departmenthas been recognized bymany state and nationalorganizations over the

years. The department ishighly regarded for its

safety record as well aswork procedures andethics. Pictured at leftare a few of the most

recent awards presentedto the department.

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2011 Annual Report

Huntsville Utilities Water Department makes changes daily toimprove and maintain the high quality of water provided tocustomers. The availability of one of the key elements of life hasalways played a vital role in location of communities. Water is noless important in the 21st century than it was when John Huntsettled near the Big Spring in (now) downtown Huntsville in 1805.Keeping with the company trend of making changes to improve ourservice, the Water Department is now actively collaborating with theNatural Gas Department to better serve the customer base.Maximizing efficiency and human capital within this newlycollaborative effort, crew members from both departments arecross-training to learn the overall workings of both utilities. Thistraining will allow the two operations departments to be moreflexible, efficient and productive in serving customers. The NaturalGas and Water Operations Departments are managed by Jimmie

Butler.Water Supply andOperations continue to

work closely. Tony Owens serves as manager over the watertreatment plants, storage tanks, and booster stations that control theflow of water throughout the service area. As Water SupplyManager, he is also responsible for the construction of the newwater treatment facility that will be located in Guntersville in thefuture. Environmental and treatment process evaluations have beencompleted, and construction will be scheduled when the economymerits it.During FY2011 the utilityʼs water treatment plants supplied a dailyaverage of over 40 million gallons to the service area. Staff in thewater treatment facilities performed 303,331 tests, ranging fromhourly to daily, to determine filtration needs in order to provide highquality, clean drinking water to Huntsville Utilities customers.Several pumps in the treatment facilities were sent out for repairsand re-installed by Huntsville Utilities personnel, resulting insignificant maintenance savings to the company and customers.Making changes to the water distribution system to improve service,Water Operations worked diligently on several major projects duringFY2011. Large projects included relocating an 18-inch service onJeff Road, a six-inch service on Cleveland Avenue, and makingimprovements to the King Drake 12-inch system. A 24-inch mainextension was partially completed for Wilson Cove. Crews installedapproximately 16,385 feet of new water mains, 29 vaults with fireflow meters, 675 domestic meters, 628 irrigation meters, and 1,357

NewWaterMain Installed 16,385 feetWater Pumped 14,675,011,000 gallonsQuality Tests PerformedAnnually 307,952Meters Installed (Domestic& Irrigation) 1,303TotalWater Customers* 88,195*Customer numbers counted by active contract accounts effective in May 2011.

ater Department

Flushing water mains isrequired after installationor repairs to assure waterquality and properchlorine residuals.

8

City of Huntsville Electric, Natural Gas, and Water Systemsservice line re-runs.Water Engineering crews averagedinspecting over 23 job/construction siteseach month. Although new homeconstruction is slower than previous years,inspection requests were still received.

Water Engineeringinspected and releasedto contractors, 29,849feet of new water mainsand 249 new servicelines during FY2011.

Numerous relocationprojects, required bythe State of Alabamaand City of Huntsville(COH), and majordevelopment projectswere designed,processed, andinspected by WaterEngineering. Some of

those site locations include Wilson Cove, Governors Drive PhaseII, Little Cove Road Relocation, North Memorial ParkwayOverpass, Taylor Lane Road Widening, Meridian Street Phase II,Lee High School Extension, Jeff Road Widening, EUL ArsenalLease Site, and the Zierdt Road Widening Project.Continuing to evolve and advance, this department is increasing itsmonitoring of regulatory action for overall system compliance withparticipation in the American Water Works Association (AWWA)and the Alabama Water Pollution Control Association (AWPCA).AWPCA recognized Huntsville Utilities Water Department with“Best Operated Plants in the State of Alabama” for operations atthe South Parkway and downtown Lincoln/Dallas plants. They alsoawarded the utility the “Best Operated Distribution System Award”for the booster stations, tanks, and wells.The Alabama Department of Environmental Management (ADEM)announced that the Environmental Protection Agency (EPA) sentnotice that the South Parkway and Southwest Treatment Plants

were recognized for achieving Area-Wide OptimizationPerformance Goals during 2011. The Goals are set by ADEM foroptimized drinking water treatment plant performance for turbidity.This reorganization is achieved through the dedicated commitmentfrom the Supply Staff to the standards for excellence that are theheart of the Area-Wide Optimization Program (AWOP). AWOP is apartnership between state regulatory agencies, water systems, andthe EPA. Water Supply was also recognized for achieving its eighthstraight year with no lost-time accidents during FY2011.Working effectively to keep costs low and improve our service tocustomers, the Water Departmentʼs Leak Detection crew locatedand identified approximately 7.1 million gallons per day in leaks onthe distribution system. Once leaks are detected, Operations crewsreact swiftly to repair the leaks.Although the water team was extremely busy during FY2011making changes to improve service, they have set out a challengefor themselves for FY2012. During FY2012 year, the water teamhopes to install 600 new service lines, develop 600 new stubs forirrigation, install 40,000 feet of new water mains to meet growingdemand, and re-route 1,300 water service lines. In seeking toaccomplish these goals, the waterteam has planned the completion oftwo state/COH highway improvementprojects in Madison County (SouthMemorial Parkway and Church Street).Quality and efficiency make one of theoldest water systems in the nation oneof the most successful water systemsin the nation. Proper planning forexpansion, efficiency, and quality waterhave laid a solid platform for “makingchanges to improve ourservice.”

In preparation for thenew water treatmentplant in Guntersville,Water Supply ran acarbon pilot test duringthe year. Anticipatingregulatory changesfrom EPA/ADEM theproposed new water treatment plant willutilize granular activated carbon filters toremove potential organic contaminants.

Each year the WaterDepartment saves thousands

of dollars by conductingrepairs and preventativemaintenance in-house.

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2011 Annual Report

Perhaps the most noticeable changes at Huntsville Utilities duringFY2011 occurred in the Customer Services Department. From theimplementation of a new invoice format to the realignment of themeter reading calendar and zones, the changes increasedefficiency and improved service to utility customers.In May of 2011, a new customer service platform was launched. Aletter-sized invoice was introduced and provides detailed usageinformation. Monthly communications are included with theinvoices providing energy savings tips, explanations of programsdesigned to help customers save money and time, and a variety ofpertinent information.The customer website at www.hsvutil.org was revised to improveease of use. Customers can manage their utility account online,

viewing their invoices and making payments easily. They caninitiate a one-time bank draft, sign up for automatic monthly draftsand other programs offered for customer convenience as well ascontribute to Project Share.Due to service area growth, the meter reading schedule was re-aligned to improve efficiency and fuel use. Where it was notuncommon, due to geographic growth, for personnel to travel fromone end of the county to another, now the Huntsville Utilitiesservice area is broken into geographic zones on a regular rotation.Huntsville Utilities has become the Tennessee Valleyʼs leader inenergy-efficient new home certifications. Working with more than adozen local builders, the Community Relations Departmentaccounted for a large portion of all distributor-certified new homesacross the seven-state, TVA region this year. More than 1,028 newhomes were certified in Madison County during fiscal year 2011 aseither Energy Star or Energy Right.Heating and cooling costs typically make up the largest part of ahomeownerʼs utility bill and that is why Huntsville Utilities alsooffers the “Efficiency Program” to our customers. The program

consists of free inspections for homeowners whoare replacing their heating and cooling equipmentand a check for balanced air flow, air leakage, andsystem output. Problems found during thiscomprehensive inspection are quickly addressed

Meters ReadMonthly 344,333Avg.Monthly BankDraft Payments 27,240Energy Efficient HomesCertified 1,028Customer Information Center Calls 392,496

ustomer Service

Community Relationsparticipates in localevents to help educateutility users on energyefficiency and otherutility concerns.

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City of Huntsville Electric, Natural Gas, and Water Systems

by participatingcontractors, and the endresult includes anefficient system withadded peace of mind.Huntsville Utilitiesprovided 126 inspectionsof this type during FY2011.Energy related information is provided through phone calls,internet communications, and presentations for civic groups andlocal schools. Huntsville Utilities provided presentations to 877students from 14 different schools and to 408 members of fifteenlocal organizations in FY2011. Presentations are customized forcurrent energy issues and are offered to all organizations and agegroups.Huntsville Utilities also participated in community events at whichapproximately 7,874 personal contacts were provided informationregarding available customer services. The Home & RemodelingShow, the Senior Expo, the Botanical Gardenʼs Green-U Festival,and Marshall Space Flight Centerʼs Earth Day were just a few ofthe public events in which the Energy Management Departmentparticipated.Passing along savings due to energy efficiency doesnʼt stop withresidential customers. The industrial customer participation in theComprehensive Services Program hit its highest level, 73participants, since introduced in 1997. A new program, EnergyRight Solutions for Businesses, helped eleven companies savenearly 2.1 million kilowatts by decreased usage through lightingand HVAC upgrades.Another cost savings for business customers is theDemand Response Program. Customers who participatereceive payment in return for agreeing to reduce electricconsumption when demand is abnormally high. Thesecustomers have special meters and can evaluate theirenergy data at any time. Huntsville Utilities has twelvecustomers with 43 facilities participating in the no-cost/no-risk program.

The Mail Center processed 1,274,677 payments, including nightdrop boxes, mail, and Electronic Fund Transfers, with an accuracyrate of 99.98%. A new Payment Remittance System eliminatedmanual data entry of customer payments and improved archivaland retrieval capability, thereby improving payment research.Customer use of the Interactive Voice Response (IVR) systemincreased. A total of 123,723 payment agreements and 11,949payments were made utilizing the automated system. Another385,000 payments were made in person to tellers at threepayment locations. Bank draft payments, both automatic andonline, increased to a monthly average of 27,240.Huntsville Utilities is working hard to make managing your utilityusage easier, making payments more convenient, and providinginformation to make you a more informed customer. Thesechanges in information format were initiated to improve service.

After a full day of instruction about theutility industry, local fifth graders

participating in the Education Days eventhosted by Huntsville Utilities blow off alittle steam by earning chances to shoot

for baskets by correctly answeringquestions from the day’s lessons.

A Customer Service Representativefrom the Customer Information

Center stands by the display of acomplimentary letter from acustomer commending her

excellent customer service skills.Huntsville Utilities prides itself onthe training and support providedto reps in an effort to continuallyimprove the customer experience.

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2011 Annual Report

ur EmployeesIn order for change to occur and improvements to be made, anorganizationʼs staff must be trained and utilized to the best of theirability. Huntsville Utilities excels at offering staff opportunities to learnand grow as employees and contribute to the services we provide tothe area. Huntsville Utilities employee retention is legendary, and whena mention is made of expanding a department, an in-depth analysis ofthe need is applied.During FY2011 Huntsville Utilities experienced significant hiringactivity. Due to retirements and hiring of supplemental staff during thesystems change in the customer information system, 67 positions wererecruited or promoted during the year. In all, nine employeesrepresenting 256 years of experience at Huntsville Utilities retiredduring the year which caused a chain reaction of promotions. At theclose of the fiscal year, Huntsville Utilities had a flat year ofemployment growth with two less employees than they started the yearwith, a total of 629 employees. Efficiency and training keep theemployee base streamlined.The Electric, Natural Gas, and Water Departments completed

apprentice trainings during the year. The Gas Department graduatedthirteen apprentices, the Water Department had ten employeescomplete their training, and Electric graduated three equipmentoperators, ten linemen and one substation electrician. Each of theseemployees attended thousands of hours of classroom and on-the-jobtraining, often outside work hours, to earn the U.S. Department ofLabor Certificate of Completion of Apprenticeship. Huntsville Utilitiesrequires its apprentices to go above the government requirements intraining and safety knowledge and is recognized for some of the besttraining programs in the nation.At Huntsville Utilities the safety of the employees, customers and utilityinfrastructure is a major concern. The plans to protect these assets arechanged and improved as technology and fresh ideas becomeavailable. Video surveillance has been increased in customer areas aswell as installation of perimeter security measures at utility locationsthroughout the service area. Utility vehicle accidents decreased withonly six preventable accidents in 2011, a 45% decrease from theeleven preventable accidents in 2010. Overall, vehicle accidents were

down from 31 to 26 total in 2011.Another safety concern is the well being ofcustomers and employees in the field as wellas in the office. During the past year,Huntsville Utilities developed a partnershipwith the Huntsville Police Department andthe Madison-Morgan County StrategicCounterdrug Team (S.T.A.C. Team) forreporting suspicious activities that mightindicate drug or gang-related activities as

All employees are required toattend safety meetings. Thetraining may range from heavyequipment safety procedures topersonal safety. During FY2011 anew Huntsville Police Departmenttask force introduced employeesto Huntsville’s gang culture. Suchinformation increases employeeawareness and helps build goodcommunity members.

Electric Department Employees 192Natural Gas Department Employees 83Water Department Employees 90Customer Services Employees 123Joint/Administrative Employees 106Temporary/Contract Employees 35Total Employees 629Customers per Employee 518

12

City of Huntsville Electric, Natural Gas, and Water Systemswell as home burglaries. Employees received training on identifyingand reporting the activity as well as how to avoid endangeringthemselves and others when such activities are observed.Personnel in the operations departments received training from theAlabama State Highway Patrol and Huntsville Police Department on

requirements for utility vehicles and securing equipment and suppliesto protect themselves and other drivers. Training on inspection ofrigging equipment and safe rigging practices for lifting and movingheavy loads was also provided. Operations crews attend monthlysafety meetings to review these and other concerns that must remainforemost in their minds on the job.The health of the employees has always been a major concern.Healthy employees miss less time at work. A new in-house Wellnessprogram was initiated during FY2011. Employees teamed up toincrease exercise and lose weight. A Smoking Cessation clinicgarnered its first graduating class of “Quitters.” Quarterly newslettersand meetings offered information on weight loss, healthy eatinghabits, and ways to avoid common health issues. Currently thecompany is anticipating teaming up with the City of Huntsville andHuntsville Hospital to form a Wellness Clinic to foster wellnesshabits as well as an alternative to visiting the doctor for minorhealth concerns.All employees are offered the opportunity for CPR and First Aidinstruction. Field personnel are required to refresh theircertification every three years. The instructors for the programwere re-certified in 2011 to comply with revised nationalguidelines for treatment of injured individuals or for those withneed for CPR.Huntsville Utilitiesʼ employeesannually give back to the community

through charitable donations and volunteer services. Employeesdonate service time, units of blood, school supplies, and Christmaspresents each year through a number of organizations. Employeesnetwork for fundraising ideas and during FY2011 raised funds totaling$15,880 for the March of Dimes, the Cerebral Palsy Foundation,Huntsville Hospitalʼs Project Linus for critically ill infants, the JuvenileDiabetes Foundation, and the American Cancer Society. Employeespledged another $10,806 to United Way during the fiscal year.Huntsville Utilities supported several community/professional activitiesthroughout the service area. The company provided mentors to theAlabama Career Center and the Veteran Administrationʼs H.E.R.O.programs to help military service veterans find employment. TheHuman Resources (HR) Department mentored human resourceprofessionals in the North Alabama Society for Human ResourcesManagementʼs Mentor University and helped train HR managementpersonnel for the National Childrenʼs Advocacy Center. Co-opemployment opportunities were provided through area colleges anduniversities. The company also provided personnel for the NorthAlabama African American Chamber of Commerce Board, AlabamaA&M University Community Development Center Board, and theChamber of Commerceʼs HR Roundtable.A healthy, functional work force is the lifeblood of Huntsville Utilitiesand the backbone of the communities in which the employees workand live. Making changes to improve service includes making changesto keep experienced, reliable employees available to support utilityservices as well as community interests.

Employees enjoy spicing up their fundraisingefforts with team spirit competitions. Theannual March of Dimes Blue Jeans for Babies

campaign uses a collegespirit theme. Employeespurchase shirts promotingAlabama or Auburn with athird Tennessee or neutralcolor theme.

During FY2011 fourapprentice programs were

completed in all threeoperation divisions.

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2011 Annual Report

As mentioned in the Customer Services section, the biggestchange of the year came with the implementation of new CustomerServices practices brought about by the SAP business softwareconversion. Over the past four years, Huntsville Utilities has beenworking on a project to replace all of its legacy computer basedsystems with the SAP Business Suite. The first phase, completedin 2009, integrated and updated all of the back office systemsincluding purchasing, accounting, and work order management.

The second phase, completedin May 2011, expanded theSAP Business Suite toencompass the front officeintegration of CustomerService. This phase includedApplications, Collections,Billing, Meter Data

Management, Printing, Cashiering, and Call Center functionality.The new business applications now work interactively to providethe most complete customer data in one unified system.The MIS (Management Information Systems) team converted over200,000 customers and implemented over 1,000 new program andconfiguration settings to support the conversion and migrationefforts into SAP. During FY2011, 3,500 service desk tickets wereclosed by the MIS Team supporting the SAP conversion as wellas new business and regulatory reporting requirements for theState of Alabama, Tennessee Valley Authority, and theDepartment of Energy.Business communication software was installed for quickercustomer service in the call center. This installation has redundantservers for high availability that will allow communications to andfrom the call center in the event of a disaster. The backup of datahas been completely automated using Tivoli. The MIS Departmentalso completed the upgrade of UNIX and Windows servers andmigrated those servers to a synced SAN (Storage Area Network)for virtualization.The Technical Services section continued installations andupgrades of services to facilitate the new SAP business softwaresystem in addition to engineering and mapping applications.Upgrades to the field services systems required improvements tothe supporting applications for field data entry. The fiber network

Automotive Maintenance/Repairs 5,670Facility Repairs/Improvements 9,424PCB/Gas Chromatography Tests 1,039Invoices Processed 16,767

dministrative Services

Four facilities techniciansmaintain four major buildingsand 32 field sites throughoutthe 800-plus mile service area.Repairs and maintenancerequiring ladders or possiblesafety hazards are scheduledfor two technicians and use ofany equipment necessary tocomplete the task safely.

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City of Huntsville Electric, Natural Gas, and Water Systems

was expanded, andredundant nodeswere added tostrengthen thenetwork.Improvements weremade to datastorage andcomputerresources, some of

which allow field personnel to access pertinent information throughcell phones and other mobile devices in a timely manner whileworking throughout the service area.The Fleet Department maintains and makes repairs to 769vehicles and pieces of equipment. Work done during FY2011included 1,682 maintenance services, as well as 3,988unscheduled repairs. Sixteen major projects, consisting of twoengine rebuilds and fourteen transmission rebuilds, were alsocompleted. In all, one supervisor, five mechanics, and one clerkcompleted 5,686 work orders during the year.Preventative maintenance scheduling for each piece of equipmenthas been computerized. This allows the staff to notify personneland schedule lube jobs, oil changes, and tune-ups during eveninghours or when the crew will not be using the vehicle or equipment.Normal maintenance parts and supplies are kept in stock,computerized so supply is always available. Non-inventory items,usually available immediately from suppliers, are purchased asneeded.

The Facilities Department continued to maintain four majorcompany buildings and 32 field sites throughout the 800+ mileservice area. Staff completed over 9,424 tasks includingrepairs, routine maintenance and building repairs, andimprovements. Some of these tasks included installing a newIncoming Voltage Analyzer on the main building power panelas well as variable speed drives on four-inch spring waterpumps to conserve energy and prolong pump life. Facilitiesalso rewired Customer Service areas and select uppermanagement offices onto generator circuits in case of

emergency power outage situations. At the operations facilities,fuel pumps were wired to portable generators to ensure a stablefuel supply during emergencies.The Stores Department maintained their excellent inventoryaccuracy with the Chase Operations Center storeroom averaging99.0% and the Triana Operations storeroom averaging 99.1% forthe year. Storeroom staff continued to work within EPA(Environmental Protection Agency) regulations to dispose of PCB-contaminated equipment. They also cleaned up 118 non-PCBtransformer leaks, 72 of which included ground spills.Approximately 140,240 pounds of debris were collected fromthese spills and disposed of at an ADEM (Alabama Department ofEnvironmental Management) landfill.Efficient inventory control, well-maintained vehicles and facilities,and proper disposal of expired materials are items that have notchanged over the years. Huntsville Utilitiesʼ commitment to deliverreliable utilities at the lowest possible cost is part of the companyʼsphilosophy. The changes that have been made to consolidatecustomer information and improve efficiency help deliver this goal.

The Fleet Department iscontinually striving to learn aboutthe specialized equipment crewsmust use. By performing repairsin-house, like the repair on this

bucket truck boom, the FleetDepartment saves the utility

company thousands of dollars onrepairs and downtime for such

pieces of equipment.

Preparing for activation of thenew SAP-based Customer

Service system, MIS trainedemployees based upon the

level of need their job required.Some employees have limitedaccess, while employees whodeal directly with customersand their data received more

detailed instruction. 15

2011 Annual Report

pril 27, 2011: Out of the DarknessHuntsville Utilities has made a lot of changes in theway we approach storm restoration since the 1989Airport Road tornado. The 1989 tornado was thesecond largest disaster for Huntsville Utilities untilthe April 27, 2011 tornado. The 1985 ice storm wasthe worst utility storm we had experienced. Theutility company has had an emergency plan formany years. In it are instructions on obtaining food,hotel rooms, supplies, use of radio frequencies,outside assistance agreements, etc.From a utility viewpoint, the 1989 Airport Roadtornado was an isolated event -- one tornado thatcreated massive damage along Airport Road over into Jones Valley. In this storm

service was lost to five substations withthe Airport Road substation being totallydestroyed. The tornado tore down threeout of four TVA transmission lines andHuntsville Utilitiesʼ transmission anddistribution lines on Airport Road.In the 1989 event, at most 15,000customers were without power due tostorm damage and substations beingde-energized due to the loss of the TVAtransmission lines. Within three days

Tornadic winds twisted, snappedand folded over 370 TVA towers.

There was no timefor clean-up as

utility crews workedround the clock.

16

power was restored to all but the damaged businesses andhouses. Huntsville Utilities crews did all the restoration, and weutilized 30 line crews and ten tree-trimming crews.The April 27, 2011, tornados and storms started early in themorning, followed by a period of calm and sunshine, then resumedwith afternoon storms and tornados continuing into the night.Seven confirmed tornados, ranging from F1 to F5 intensity,

touched down in the Huntsville Utilities service area.During the morning storms, power was lost to 42substations serving about 60,000 people. By 4 p.m.power had been restored to 17 substations, andabout 25,000 people were without power.Then, following the midday break, tornados took out

all of TVAʼs 500KV and 161KV transmission lines on all sides of Huntsville,causing a loss of all power to Huntsville and most of NorthAlabama.After that, the worst tornado came through the western part of thesystem in the Harvest/Monrovia area and destroyed over 500houses and businesses or made them uninhabitable.Typically, the loss of 30-40 poles would be considered huge in atornado or storm. Huntsville Utilities had 390 poles down and247 transformers destroyed.The April 27th storm was unique because TVA lost over 370

transmission structures and about 12 transmission linescausing a total blackout to Madison County. Therefore,the restoration of power was twofold. First Huntsville Utilitieshad to get power, 800 megawatts (MW), from TVA toenergize 80 substations. The second step was thenrepairing/replacing transformers, fuses, wire, lightning

arrestors, insulators, guy wires, and service lines where needed.It took five days to get 800 MW of power from TVA. It took another four

days to restore power to all customers whose homes wereinhabitable. While waiting on TVA to restore power to oursubstations, Huntsville Utilities used 30 bucket crews, 15outside crews, 30 tree-trim crews, and 15 fusing crews to putup poles and wires and survey damage that could bevisually identified without power on the entire system. The

City of Huntsville Electric, Natural Gas, and Water Systems

With no power citywide,trailers were brought in tohouse and feed utility workers.The bottom photo shows theberths inside trailersconverted to sleepingquarters. The top photo showsthe kitchen trailers and foodstorage.

Crews for Lakeland & Lake Worth, FL,Tuskegee, AL, and Pulaski, TN, helpedHuntsville crews.

5:55 AM, May 7th: Dispatchersawait instructions from theirsupervisor as they prepare tosend crews out for another

long day of repairs. The out-of-town crews would be

released the next day as therecovery started slowing.

Crews saw many sad scenes asfamilies worked clearing debrisand searching for familiar items.

TVA rebuilt towers and rana dedicated line to restore

our power source.

17

2011 Annual Report

utility tried to get as much repair work done to the feederlines that serve power to houses before the substationswere energized. Once the substations were energized,damaged transformers, fuses, and other equipment notvisually identified could be located.By the following Wednesday morning, May 3rd, all

substations were energized, and power was restored to 152,000 of162,000 residences and businesses. The remaining 10,000customers in habitable structures in the most heavily damaged orisolated areas had power restored by Saturday, May 6th.Over the years, Huntsville Utilities has updated the emergencyaction plan to accommodate the community and industry changes. Afew procedures used for the April 27th recovery effort which havebeen added to the plan since 1989 include:

• Fifteen Two-Man Survey Crews were formed to access stormdamage. Meter readers and Gas and Water Departmentpersonnel were teamed with an Electric Department employeeto perform this function.

• Fifteen Two-Man Fusing Crews were formed to get to areasquicker or to areas that were lower on the priority restoration listspeeding up power restoration.

• We have more tree trimming crews, twice that of 1989, undercontract and brought more tree crews in from our vendor. A totalof 30 tree trim crews were working clearing limbs and trees toallow line clearance.

• Fifteen electric crews were brought in from Florida, Tennessee,and Tuskegee to assist with the restoration. The assistance wasrequested the night of April 27th, and all had arrived by April29th. They stayed through May 8th.

• An emergency restaurant and hotel were set up in 18-wheelervans on April 28th. The vehicles housed 41 out-of-towncrewmembers and served over 5,700 meals and drinks. In thatno power meant no restaurants, this was an ideal solution tokeep the crew rested and fed, decreasing the potential for awork-related injury during the recovery.

• Gas and Water crews were utilized to haul materials to job sites,

Utility workers were greeted likeheroes, and volunteers of allkinds were deeply appreciated bythe affected residents. Even in areas where

destruction meant therewould be no return of power

for a while, crews had tomake sure the power wastruly terminated so that

when TVA restored power,there would be no fatalities

or damage incurred.

Over 400 poles werereplaced during

reconstruction of the system.

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remove debris, and flag traffic.• The Interactive Voice Response

System (IVR) was used to taketrouble/outage calls from customers,assisting Call Center personnel.

• The news media and public weregiven regular reports on restorationefforts through releases and interviews with television, radio, andnewspaper reporters. Huntsville Utilities also utilized social mediain the forms of Twitter and Facebook to get information out quicklyand efficiently.

• The computerized Trouble Order Management System which trackscustomer outages, streets without power, etc., was utilized to help theDispatchers manage the restoration.

• Three Command Centers were established:o One for restoring power to substations,o One for dispatching outage tickets to crews for customers on the

substation feeder lines, ando One to prioritize what businesses and residences would be turned

on using the criteria of which feeder had the most customers out inorder to get the most customers on with one repair. Watertreatment, hospitals, and food stores/restaurants/gas stationcorridors led the early restoration priority list, followed byresidences, large businesses, etc.

Ultimately it is hard to describe how the employees of Huntsville Utilitiesbanded together into a synchronized machine working to restore order tochaos. From Stores Department personnel who worked round the clock

providing equipment to field crews, to Water Departmentpersonnel who drove thousands of miles throughout the systemto power booster stations by generator (thusensuring clean water for the injured community)the examples of ingenuity, cooperation and thekinship of sharing a common purpose, bringingrelief to our communities, became the torchHuntsville Utilities employees carried together aswe re-energized the valley.

City of Huntsville Electric, Natural Gas, and Water Systems

Regular press conferences wereused to help inform the public

about the recovery effort.

Utility office personnel weremoved to generator-power

spaces, and work continued likenormal for some departments.

19

2011 Annual Report

ustomerGrowth ChartsInThousands, Rounded

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