City Beat: Council approves electric rate increases

Staring down a vote to raise Springfield’s electricity rates, City Council members Cindy Rushefsky and Doug Burlison argued for a one-year reprieve on City Utilities’ proposed increases beginning in October 2014. Their peers saw things differently and with a 7-2 vote, council on Sept. 9 approved rate increases for citywide utility customers in fiscal years 2015–17.

The vote allows the public utility provider to raise residential rates by 5.9 percent in fiscal 2015, 3.9 percent in fiscal 2016 and 3.7 percent in fiscal 2017. CU’s fiscal year begins in October, meaning the rate hikes are expected to begin next fall.

CU has said average residential customer bills would increase by $5.41 per month in fiscal 2014, and by $3.75 per month during the following two years. CU spokesman Joel Alexander said commercial rate increases would mirror the residential movement, with several factors influencing business rates. The average annual non-residential rate in 2012 was $9,850, a 25 percent increase compared to 2006.

The increases are designed to cover the cost of federally mandated upgrades to CU’s coal-fired plants and keep pace with the cost to serve customers, according to CU officials who spoke at the Aug. 26 public hearing. Information provided to council in the bill projected new expenses of $42.7 million for environmental compliance and a rail loop expansion to accommodate longer trains at the John Twitty Energy Center. Alexander said a longer loop would reduce unloading costs.

CU has raised rates each year since 2010, when an 18 percent hike went into effect, followed by 2 percent to 3 percent rises in 2011 and 2012.

Next month, the first in a series of three annual water rate increases between 11 percent and 9 percent are scheduled to take effect.

The previous electric rate increases were spread across three years at council’s request due to economic conditions. Rushefsky told her peers financial challenges remain, echoing the concerns of 10 residents who opposed the hikes at the Aug. 26 public hearing.

“We’ve asked (CU) to stagger the increases, and it has done that. But we have not denied the rate increases it has asked for, even in the heart of the recession,” Rushefsky said before voting against the increases. “I am asking for a one-year reprieve – an opportunity for more Springfield residents to catch up and catch their breath – to see if our economic recovery can reach a little further down. I’m doing it because I think CU is quite capable of functioning without damage for a year without a rate increase. I have a lot of confidence in the intelligence, the management ability and the inherit good faith of City Utilities management and staff.

“But I do want to see if they have the vision to look behind utility bills and see the people who pay them.”

Councilman Doug Burlison cast the other negative vote.

“I see the struggles of people trying to make it day to day. It is not an isolated situation. You could almost say it is epidemic,” Burlison said.   

Other council members said the rate increases were necessary given CU’s charge to provide the community with reliable and affordable energy. Mayor Bob Stephens and Councilman Jerry Compton said Springfield would continue to offer lower rates than many other areas of the country, even with the increases in place.

According to 2011 data from the Energy Information Administration, the average retail price for electricity was 11.72 cents per kilowatt hour. The current rate in Springfield is 7.93 cents per kwh.

 “I believe frustration over rate increases should be directed to standards that are enacted without regard to the economy or current technology,” Compton said.

Stephens countered arguments made in the public hearing that CU should do more to decrease its dependence on coal. He said the utility provider buys wind energy from a wind farm in Kansas, and CU has plans to invest in solar power.

“We essentially grow our own. We are not dependent on the grid out there as a number of other communities are,” Stephens said.

In a separate action, council gave a unanimous thumbs up to CU’s fiscal 2014 budget without discussion. Total receipts for the upcoming year are projected to come in at $553.2 million, 16 percent higher than the $478 million in fiscal 2013. Roughly $52 million of the estimated $75 million increase is planned to fund environmental compliance efforts at the Clearwell and Blackman treatment plants.

HB 253 opposition
With an 8-1 vote, City Council approved a resolution supporting Gov. Jay Nixon’s veto of House Bill 253.

The controversial state tax-cut bill divided business groups and legislators, largely along party lines, before a veto override failed in the House of Representatives on Sept. 11. The House fell 15 votes shy of the 109 votes required to overturn the governor’s veto.

In the run-up to the state veto session, the Missouri Chamber of Commerce and Industry fronted a campaign backed by lobbyist dollars in support of overriding Nixon’s veto, while groups such as the Springfield Area Chamber of Commerce and Springfield Board of Education said the bill threatened school budgets and services across the state.

Councilman Craig Hosmer, a former Missouri state representative, said the bill is bad for Springfield because it contains provisions that increase taxes on seniors and students by repealing a sales tax exemption on prescription medicine and textbooks. If HB 253 was implemented, Hosmer said it would have removed some $800 million from Missouri’s general revenue fund, mostly pulling from the budgets for elementary, secondary and higher education and corrections. Springfield Public Schools was projected to lose $8 million in fiscal 2014 funding under HB 253.

Hosmer said the Springfield-Greene County Health Department, the Springfield-Greene County Office of Emergency Management and the city’s Workforce Development services also faced cuts if legislators overrode the governor’s veto. He said cuts also might lead to downgrades in the state’s bond ratings, which would impact the city of Springfield’s ability to borrow money.

“I’ve served in the legislature, and I know the information we got from council was very important to me and I think it is also important to our delegation,” Hosmer said before the vote.

Councilman Burlison cast the lone vote in opposition.[[In-content Ad]]