City Beat: CU power plant, rate increase proposals put on hold

City Utilities officials have some more explaining to do regarding CU's new power plant proposal and subsequent electric rate hikes, Springfield City Council determined at the Jan. 13 meeting.

After much deliberation by both CU officials and Springfield citizens, council tabled three bills relating to the $599 million power plant and 16 percent rate hike over four years. Councilwoman Teri Hacker initiated the motion, she said, to give council members and CU officials more time for discussion; Hacker wants to see a surcharge on county electric customers that's higher than the current 5 percent surcharge.

The bills are expected to return to council at the Feb. 24 meeting.

Several Springfield citizens raised questions regarding the need and use of a new power plant, but the bigger issue to Hacker is the surcharge for CU customers outside city limits. She thinks increasing the surcharge would minimize urban sprawl.

"We feel it is one element that encourages smart growth and discourages sprawl. We're trying desperately to figure out how to do it right here," she said, citing downtown redevelopment and an increase in city annexations.

CU's plan, based on studies that show the city will experience an electric power shortfall by 2007 if no plant is added, calls for a $532 million bond issue that CU was hoping to present to voters in August. The 4 percent annual rate hike over the next four years would begin in October 2004, according to the proposal.

John Twitty, general manager and chief operating officer for CU, fears this delay may hurt the chances of a bond-issue vote this summer.

But Hacker views it an opportune time to hammer out the surcharge details. "This particular issue would be much more tangible to people," Hacker said. "It is dollars and sense." She is proposing a 2 percent surcharge increase for five years to create a "tangible benefit to living in the city." City rates could then be adjusted to reflect the additional surcharge revenues, she said.

Councilman Conrad Griggs has doubts if the bond issue would pass considering the economic times.

"An increase looks difficult right now," he told Twitty. "I am concerned about the timing of the issue."

Twitty responded that CU officials hope the economy would rebound by the time the first 4 percent increase would go into effect.

Springfieldian Stan Van Velsor pointed out that the bond request might compete with other public money needs, such as the Springfield R-XII school district. He told council: "Knowledge of a looming bond (issue) and rate increase would likely be a death blow to our school (district)," which is seeking its own bond issue in April. He asked council to vote against the CU proposal.

Mayor Tom Carlson likes the idea of a surcharge, but wants to hear from the owners of the utility the public.

"Surcharge is something I've always been in favor of," he said. "I would like to know how the people of our community feel about it."

The public can speak at the Feb. 24 meeting.

Existing CU rate change

In a separate CU matter, council considered a 3 percent increase on existing electric rates to go into effect in October.

CU Manager of Pricing Cathy Meyer told council a typical customer would pay $1.56 more per month, she said. It has been 11 years since CU's last increase in electric rates.

The increase would bring CU's 2004 revenues to $4.3 million, Meyer said. The additional operating income will fund capital projects and repay debt service owed on the McCartney Generating Station.

The bill also would repeal a special mobile home park rate that is given to 19 mobile home parks.