City Utilities budget reflects slow turnaround

City Utilities is expecting a slow recovery from the recession, and officials are stressing measures already taken to address the current economic climate as they await Springfield City Council approval of the fiscal 2011 budget and a proposed hike in electric rates.

Council will vote Sept. 21 on the utility’s $520.7 million operating budget and rate hikes, to be implemented incrementally during a three-year period. At a Sept. 7 public hearing, CU officials said the company plans to delay spending $51.6 million during the next four years.

“That includes $21 million of capacity-related projects that we expect to have to complete at some time, depending on when growth begins to come back,” CU General Manager John Twitty told council.

The remainder of the savings will come from areas such as maintenance, administrative and employee benefits, he said. Included among the savings is a hiring freeze, said CU spokesman Joel Alexander.

“We’re only looking at filling a position if it’s absolutely critical,” Alexander said, noting CU currently employs 1,007 full-time staffers and has 79 full-time positions it is leaving unfilled. Two years ago, CU froze wages for its non-union staffers, he said. “We’re in the same position as many other companies and the city itself.”

If council approves the electric rate increase, CU’s residential rates would increase by 3 percent starting in October 2011 and by 2 percent in each of the following two years. The average residential customer’s bill would increase $2.34 per month the first year and $1.75 per month each of the next two years. Alexander said increases for businesses would vary by usage. Small-business customers would see a roughly 2.5 percent increase, which would increase monthly bills
by about $2.40, while CU’s largest electric users would see a 7.5 percent hike and monthly increases of nearly $15,000, he said.

Members of the business community spoke in favor of the increase, including Dynamic Earth owner Matt O’Reilly and Springfield Land President Stephanie Stenger Montgomery, who said she believes CU leaders requested the lowest increase they could.

“My brothers and I own and operate a small business,” added Joe Jenkins, co-owner of Diesel Exchange. “We are directly affected by power outages. One hour lost due to loss of electricity costs us about $2,600 in lost revenue.”

Rate increase objections raised by opponents included the additional expense during a time when many already are struggling due to the recession, as well as a request for an explanation as to why it seemed electric rates increased during the summer months.

“We do not change our rates in the summer,” Alexander said of the query. “Summer is the time of year when you see electric usage peak, and that’s going to be true anywhere people are dependent on air conditioners. But the rates don’t change.”

St. John’s annexation and rezoning approved
Council unanimously passed a rezoning and annexation related to the proposed site of a St. John’s orthopedic hospital at the southwest corner of Evans Road and U.S. Highway 65. The ordinances rezoned 40 acres – 30 acres of which were first annexed into the city – to a government and institutional use district.

The health system plans to build a 48-bed 149,000-square-foot orthopedic center at the site, which would employ roughly 150 workers. The estimated construction cost for the two-year project is $104 million. Officials have said construction could begin by the end of the year, pending a sale of the 30 acres.

Storage containers
At its Sept. 20 meeting, the city hopes to end a long-standing debate about storage containers. Two bills were introduced at the Sept. 7 meeting, though the public hearing will be held on Sept. 20. One ordinance adds three new definitions to the fire code, which makes it clear that storage containers and trailers must comply with the code, said Planning and Development Director Ralph Rognstad. The second bill is related to zoning ordinances.

“In nonresidential zoning districts, storage containers and trailers are allowed with the same requirements as building a building,” he said. “You can’t build in required open space, in setbacks, in required parking.”

There is also no limit on the number of storage containers, he said. According to past Springfield Business Journal coverage, storage containers have been a point of contention since 2000, when city staff first noticed some uses didn’t conform to city zoning ordinances.

In 2006, council requested a review of the law and staff proposed requiring permits for all on-site storage.[[In-content Ad]]