The man with the power in Dalton

Tom Bundros was working in Atlanta for Georgia Power and the Southern Co. two decades ago when he got a call from Dalton Utilities about coming to work to help the municipal utility straighten out its finances and environmental compliance.

The FBI had raided the utility's offices in 1995 and the utility was cited for repeated environmental violations of its waste water treatment system. Although Dalton Utilities boasted some of the lowest rates across its electric, gas, water and sewer services, the utility had not always invested adequately to maintain its system, which was in need of a major upgrade.

"I knew it was a big opportunity to fill some big shoes and help make some needed changes," Bundros recalls.

Under former Dalton Utilities President Don Cope, who retired at the end of 2015, Dalton Utilities has spent more than $900 million over the past 20 years improving and expanding the utility's infrastructure.

Bundros left Dalton Utilities for three years during the turnaround to serve as chief financial officer for the Colonial Pipeline Co., the nation's biggest pipeline company. But he was enticed to come back as chief operating officer in 2012 and assumed the top job at the biggest utility in Northwest Georgia at the start of 2016.

"With the leadership of Don Cope and the board, the utility literally went from worst to first as far as regulatory and environmental compliance and there was an absolute overhaul of the utility's infrastructure," Bundros says.

Bundros, the 59-year-old CEO of Dalton Utilities, is eager to build on the utility's success for the future. Over the past year under Bundros, the utility has mapped out a new strategic plan to continue to invest in sewer and water systems and to renegotiate some of its wholesale power purchase agreements in an era of changing power demands.

Dalton Mayor Dennis Mock said Bundros brings both a community commitment and industry expertise to leading Dalton Utilities, which Mock said is one of Dalton's key assets for growth.

"He's a top-knotch guy and we're glad we were able to promote from within when that vacancy occurred," Mock says. "Our forefathers did a great job of setting up this utility to help us be a very successful small city and I hope Tom can build on that."

Bundros wants to keep Dalton Utilities as the innovative and low-cost utility it has been through most of its 128-year history, but with an eye toward ensuring it maintains what is already has and reinvests in its infrastructure.

Investing for the future

As a finance manager at Georgia Power and the Southern Co., Bundros learned early about the capital intensive nature of utilities.

"Any utility system, on the surface, appears to generate a tremendous amount of cash," says Bundros, who has worked in top finance jobs at Georgia Power and Colonial Pipeline before joining Dalton Utilities as its CEO. "But what is not as well known is that a tremendous amount of cash is needed to keep the reliability of that infrastructure.

Customers' expectations for reliability of the electric system have made a quantum leap and people have far less tolerance today for any power interruptions and the public, as well as regulators, demands utilities operate in a cleaner, more sustainable manner, Bundros said.

"When I was first recruited here, the infrastructure was falling a part and there were not a lot of administrative or managerial processes in place," he said. "It used to be that the joke was you could tell what color the carpet companies were using as dye that day by looking at the color of the river. Nowadays, there is nobody who would find that acceptable. There is an ever increasing expectation of environmental and regulatory compliance that exists now that 20, 30 and 40 years ago a lot of people just didn't give much heed to in the past."

To keep its rates low for its carpet industry customers, Dalton Utilities also had not always maintained the pipes, sewers, power lines and other infrastructure used by the utility to deliver its diverse array of services.

Pioneering reservoirs, power, fiber

Dalton Utilities has long been a leader in new initiatives to serve the carpet industry and local business needs. Under the leadership of the late V.D. Parrott, the utility built reservoirs and massive water systems, along with additional power generation, gas lines and sewer systems, to serve the carpet industry as it grew rapidly in the 1960s and 1970s, initially using water-intensive dying processes.

The utility also experimented with the land treatment process at its Loopers Bend Wastewater Treatment plant, which ultimately proved an environmental disaster and required the utility to spend nearly $100 million to upgrade its sewer system and limit pollution from carpet mills into the Conasauga River.

But even with such hefty investments, the utility still boasts relatively attractive rates for the 78,000 customers it serves in parts of five Northwest Georgia counties.

According to the Energy Information Administration survey last fall, Dalton Utilities residential rates of 7.5 cents per kilowatthour for electricity are 35 percent cheaper than the statewide average across all of Georgia and are more than 40 percent below the U.S. average. Dalton electricity rates are even 17 percent below those charged in Chattanooga by EPB or across the street by the North Georgia Electric Coop - both distributors of power generated by the Tennessee Valley Authority.

Betting on new nukes

Bundros is similarly optimistic about Dalton Utility's ongoing investment in the next two reactors being built Vogtle Nuclear Plant near Waynesboro, Ga. - the first of the next-generation nuclear units built in America.

Although delays and cost overruns have ballooned the costs of the new reactors at Plant Vogtle up to $16 billion, Bundros says Dalton should still benefit by its 1.6 percent ownership in the project.

The plant is being built by Southern Co.'s nuclear unit and is jointly owned by Georgia Power, Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and the city of Dalton.

Bundros, who worked at Southern Co. in the 1980s when the first units were built at Plant Vogtle, recalls similar concerns in the 1980s when the first two units were built and costs rose to nearly $8.9 billion by the time the final Unit 2 reactor was completed in 1989.

"There was all kind of concerns and woe when those units ended up costing more than originally thought, but in hindsight those investments in units 1 and 2 at Plant Vogtle have been a terrific investment. It has consistently been one of the lowest cost providers of reliable electricity in Georgia. Given the regulatory issues with coal, the nuclear options looks brilliant," Bundros said. "Over time, nuclear is the safe bet option and takes a lot of the price volatility out of the equation when you consider the generation of electricity."

More power, lower rates

Even though TVA and other utilities are seeing relatively flat load growth in recent years, demand for electricity continues to grow at Dalton Utility, thanks in large part to the recovery in the floorcovering industry.

"Local industry has been very supportive of the utility and vice versa," Bundros said.

Dalton Utilities cut its industrial rates by 1 percent in January and Bundros hopes to further trim rates by renegotiating some of the utility's wholesale power contracts.

Dalton Utilities has limited debt and has already pre-funded more than $100 million toward its share of the Plant Vogtle nuclear plant.

Even with higher capital spending, Dalton Utilities expects to keep rates steady or even lower by negotiating better power purchase agreements. The utility cut its industrial rates by 1 percent at the start of 2017 and Bundros said he is "cautiously optimistic" rates could move even lower.

"Over the past several years, the new natural gas generation that is coming online, coupled with the low cost of natural gas, is creating a market where new electric generation is more reasonably priced than incumbent generation," Brundos said.

Liquid assets for new industry

While electric demand has grown, water and sewer demand has fallen as carpet manufacturers have shifted to new production means and dying techniques that require only a fraction of the water their mills once demanded. Dalton Utilities is permitted to provide nearly 65 million gallons of water a day, but the utility is now selling only about half that volume.

That has cut sales for water and sewer at Dalton Utilities, but it also has created opportunities for Dalton Utilities. Bundros said he is exploring possible water sales to neighboring utilities. Even better, Bundros said, is the prospect of using water and sewer capabilities to lure new industry, especially those needing abundant water service not available in the Atlanta region or many other parts of Georgia.

Dalton Utilities has a full-time economic development recruiter to work with local agencies and industry to promote economic growth - one of the top priorities for Dalton Utilities through its history and re-emphasized in last year's strategic plan.

"We're very positive and we've seen good growth in all sectors of our business," Bundros said. "The recession hit us very hard, but we're starting to see a lot of housing starts and there is growth now in residential, commercial and industrial activity."

When the Great Recession slowed the economy and pushed Dalton's jobless up to 13 percent in 2009, Dalton Utilities began deferring from $10 million to $15 million a year in capital expenditures, Bundros said.

"Now we have a backlog of close to $170 million of capital projects that we are needing to address," Bundros says. "We're starting to look at alternatives for financing CAPEX (capital expenditures)."

Bundros said having five utility services provided by the same utility - electricity, gas, water, sewer and telecommunications - is not only more convenient for Dalton residents and businesses to sign up and pay for utility services. It also allows Dalton Utilities to share staff, support services and billing to help hold down the costs of each service. Bundros said the infrastructure built by Dalton Utilities helped allow the carpet industry to grow in Northwest Georgia and provides key attributes for developing and growing other businesses.

Dalton Utilities has also been a pioneer in municipal utility investments in fiber optic cable and telecommunications systems.

In 1999, Dalton Utilities expanded into telecommunications and launched its internet and TV service to all customers under the OptiLink brand in 2003, years before EPB created its fiber-to-the-home service that brought Chattanooga the first citywide gigabit-per-second service in 2010.

"Some of EPB management came to us before they launched their fiber service to see how we had done it," Bundros recalls.

The investments the utility has made for the long term is similar to Bundros' approach to the Dalton community, according to Carl Campbell, executive director for the Dalton-Whitfield County Joint Development Authority,

"Tom is a big picture thinker who focuses more on the long term than just the immediate and he's very sound," he said. "When you can tell your propects you have world-class services at very attractive rates, that's a big advantage."

For all the economic gains in Dalton, Bundros is keenly aware of the community's needs and those who are less fortunate. That's why in his first year as Dalton Utilities' CEO Brundos headed up the the $3.6 million fundraising campaign for United Way of Northwest Georgia last fall.

"For him to step into that role in his first year as the CEO at Dalton Utilities was very commendable and I think shows his commitment to our community," said Rob Bradham, president of the Greater Dalton Chamber of Commerce.

But Brundos says he's staying focused on his day job and implementing the utility's new strategic plan, a document that sets the utility's long-term goals.

"I feel like we are at a great place with a strong staff here now, and I'm looking forward to accomplishing even greater things," he says.