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City vs. CU sparring matches getting tedious

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Is this any way to run a city? Or a utility?

The testy relationship between City Utilities and City Council showed its seamy side again recently personified and personalized by the apparent enmity between Mayor Lee Gannaway and CU General Manager Robert Roundtree.

This time the issue is a proposed increase in natural-gas rates for customers of the municipally owned CU. In times past, the issue has been the Partnership Industrial Center, CU's plans for fiber-optic telecommunications and the price of tea in China.

That last is facetious, but only to point out that the subject of debate is hardly ever the point.

Personalities clash. Management styles differ. Ideologies conflict.

And somehow the city's and the utility's business must be conducted. This is not the way. Business in Springfield must also be conducted by all of you. An important element of doing business from the home-based service agency to the largest manufacturer is the price and delivery of utilities.

City Utilities' proposed rate increase would raise the average charge for gas service $6 per month for most business users. Large industrial users would see an average $125 per month additional charge for the specialized agreements they have with CU. This represents the first gas-rate increase in seven years.

In addition, and less discussed, CU asks to create a new category of customer, Large General Power Service, for those who demand more than 1,500 kilowatt hours of power per month. That applies only to CU's 30 largest power customers. This is a group that represents the majority of CU's revenue.

Those 30 customers are also the most attractive to CU competitors when retail utility deregulation occurs.

Ah, deregulation.

Certainly management of CU considers deregulation. I dare say a breath is not drawn, a purchase order for paper clips is not filled, a wholesale electricity contract is not executed, a strategic plan is not implemented and a rate increase is not proposed by CU management without deregulation foremost in mind.

All of us, as rate payers of CU and residents of Springfield, are, in essence, stockholders of the company that is City Utilities.

Thus framed, CU's net income (heck, let's call it profits) can be seen as a question of dividends and equity. Dividends, in this analogy, would be steady rates or rate cuts, returning to stockholders the profits of the enterprise.

Profits committed to expansion, financing and maintenance increase equity in this company we all own. That money isn't taken away from stockholders just because it's not returned in the form of cash dividends. It is reflected in greater owner equity on the balance sheet.

Admittedly, it's a fine line deciding how to keep stockholders happy with a prudent balance between dividend payout and asset reinvestment. But a savvy investor in a company facing an increasingly competitive market would want his greater investment protected with the strategic positioning of the company.

The elements of this debate aside, squabbling is no way to make decisions.

The Board of Public Utilities is comprised of members appointed by the City Council. If council members, and the mayor, disagree with CU management, appoint board members who reflect your interests. Then let that board do its job.


City Council July 6 will consider approval of a Community Improvement District in downtown.

The Business Journal is not in the habit of endorsing candidates or causes. Nor am I wont to call into question our future news coverage by declaring a wished-for outcome.

Nonetheless, as corporate citizens of downtown, we could not be more in favor of the proposed CID.

Downtown advocates have succeeded in persuading 54 percent of individual property owners, representing 70 percent of the assessed value in the proposed district, that the benefits offered by CID are worth the investment.

When a majority of folks express a willingness to pay for needed services and promotion themselves, they should be heard.

Investment begets more investment. The creation of a CID will benefit all of Springfield and those most in position to reap those benefits have said they will pay for everyone's reward of a better downtown.[[In-content Ad]]


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