Winter Newsletter 2022
Allow me to tell you a few stories
In 1865, a $20 gold piece would buy a good saddle or a very fine suit. Today, that same $20 gold piece (one ounce of gold) would buy a good saddle or a very fine suit. The cost of the saddle in 1865 was $20 and the cost of the same saddle today is over $1,600. So, what has changed?
The ounce of gold in 1865 is still an ounce of gold today. The quality of leather and the material used, the quality of workmanship and skill involved in making of the saddle or the suit are the same. So, what has changed?
The “value” of these items is exactly the same. So, what changed? You can see where I am going with this: What has changed, is the “value” of the money. Inflation is the de-valuation of money.
Allow me to tell you another story.
A while back I had a conversation with a gentleman who lived in North that said he came to the United States in 1964 on a US government program that paid him $3,000 a year to attend graduate school. To which I chuckled. He said, “No, as a student in 1964 you could live on $3,000 a year”. His intention was to get his degree and the to return home but, upon receiving his doctorate in 1967, he was offered $16,000 per year from a local company. This he couldn’t refuse and has been here ever since. This US investment; brought “value” to the country, to this local company and to your Foxcliff community over all these years.
The point of these stories is to draw attention to the difference between “costs” and “value”.
This brings me to my final story.
Mapleturn needs to replace the vacuum station which is part of our AirVac vacuum sewer system. This system, put in place in 1971, has served the community well but needs some serious upgrading to the building and equipment.
The MU board hoped we could get a portion of the American Rescue Plan grants to help pay for this upgrade. It does not seem that this is going to happen. We then investigated getting a loan from the State Revolving Fund (infrastructure money), but we do not qualify because the funds are focused on under-served communities. We have decided to purchase the equipment with money we have in reserve and then fund the new building through a short term loan from the bank.
I priced the equipment from AirVac in Nov. 2021 and was given quote for $215,000 for the station equipment. Now, in November of 2022, the price is $305,000. When I got this quote, I asked our sales rep. just what “value” was added to this equipment this year that would justify a $90,000 increase. He just looked at me dumb founded. I knew his answer (we all know his answer), it is that their costs are going up. We all know this because everyone’s costs are going up.
Unfortunately, it is not just the cost of the AirVac equipment that is going up. All of our costs are under this inflationary pressure. Everything from energy, fuel, insurance and brass are all up considerably. This brings me to the point that Mapleturn is going to need to follow suit in order to continue providing our services for our customers. In the next few months, we will be petitioning the Regulatory Commission for an increase in rates. Our last rate increase was phased in over 2016 and 2017. We have been reluctant to do this. And although the inflation may let up, prices will not go back down to 2017 levels.
Inflation is a taxing mechanism the Government is using to fund their projects. It can also be an artificial “supply and demand” excuse caused by supply chain issues. Neither of these, changes the fact that we are needing to replace the AirVac system components, and that all of our other costs (like yours) are going up as well.
There seems to be little any of us can do about this. A change in policies/habits at the highest levels is the only way things are going to change.
Through my rantings, I guess the moral of the story is: This country is not going to see any changes until everyone understands the difference between “cost” and “value”. They are not the same. And, unfortunately, I don’t see this happening.
from the Staff of Mapleturn Utilities