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CU budget has no planned rate increase 

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Last edited 10:24 a.m., Sept. 9, 2021

The proposed City Utilities of Springfield budget for its next fiscal year includes no base rate increases to customers. 

Rob Rector, chair of the CU board of directors, and Amy Derdall, CU’s vice president and chief financial officer, spoke to Springfield City Council at its regular meeting Tuesday to present their $632 million budget for the fiscal year ending Sept. 30, 2022. The budget is up for approval at council’s Sept. 20 meeting. 

Derdall drilled down into some of the specifics of the budget, which includes lower receipts and expenditures than the fiscal 2021 budget. 

Receipts for the revised fiscal 2021 budget were $641 million, but they are projected at $606 million in fiscal 2022. Expenditures in fiscal 2021 were $653 million, as compared with $595 million in fiscal 2022. 

A major factor in the lower fiscal 2022 budget is fuel prices, projected at $160.1 million in 2022, compared with $194 million in fiscal 2021. Derdall said when the fiscal 2021 budget was put together, natural gas had a unit price of $2.45, but it is currently up to $3.85. 

“Our customers, over the last year especially, have enjoyed natural gas prices at an all-time 30-year low,” Derdall said. “So although we’re up to $3.85 and that’s higher than what we have seen in prior years, it’s still less than what is considered an average natural gas price.” 

To hedge against fluctuating fuel costs, CU purchases natural gas at a set price in advance of winter and keeps it in storage. That is a stronger focus in fiscal 2022 after February’s severe weather events taxed the utility’s resourcesDerdall said. 

She added that natural gas prices are a pass-through cost for customers.  

“Those natural gas costs are dollar for dollar passed through to our customers,” she said. 

In fiscal 2021, CU had higher receipts due to off-system sales of electricity, higher gas costs and fiber financing. 

Derdall also talked about programs to help customers pay for insulation. The budget includes $200,000 for no-cost insulation for low-income customers, with an additional $100,000 being provided by a partner to be announced soon.

The budget includes a $750,000 increase to its insulation rebate program that is available to all customers and provides a 50% rebate  up from 20% in 2021  for adding insulation to reduce energy use and to lower bills. 

“We’re very excited about those programs, and we really hope our customers take advantage of those and utilize those services that we are providing,” Derdall said. 

CU also runs the city’s bus service, and Councilperson Craig Hosmer noted that 25% of Springfield residents live in poverty. He asked about the feasibility of providing free transportation to people most in need in the city. Currently, a bus pass costs $45 per month for unlimited use. 

Derdall said CU is not permitted to give free services as a condition in its 2006 revenue bonds that were used to finance the construction of John Twitty Energy Center Unit 2. 

She did point out that bus fares constitute only about 8% of the cost to run the overall system, which runs at a cost of $14 million with overall revenue from passengers at only $800,000. 

“We do continue to look to see what options we have,” she said. 

CU provides free energy to the city government buildings, but Derdall said that is stipulated by the city’s charter. 

Renewable energy 
The budget includes a commitment to more than 40% renewable energy sources for the city. 

“CU continues to lead the state of Missouri with its renewable portfolio, and we’re very proud of that,” Rector said. 

Having a renewable portfolio is an important priority for CU, according to Rector. 

Derdall said the state target for investor-owned utilities is that they use renewable energy sources at a rate of 15% or greater. 

“We do exceed that by about 25%,” she said. 

In March, Springfield Business Journal reported a slightly higher percentage, with 45% of CU’s electricity taken from renewable sources. Of that, 84% of was from wind, 14% was from hydroelectric power and 1% each was from solar and landfill gas. 

Derdall displayed a graph showing 40% of the energy supply mix coming from renewable sources, but another 27% coming from market sources, which she said can include coal, natural gas, renewable sources and nuclear. 

“We look at a broad spectrum,” she said. 

Mayor Ken McClure said that the high figure does not mean the city should be satisfied with that level of renewable energy, but added, “It really shows how remarkable we’ve been on renewable.” 

In addition to its commitment to renewable energy sources, the proposed budget, Rector explained, focuses on infrastructure, with continued emphasis on natural gas and water main renewals and electric pole replacements. It also includes funding to move electrical facilities underground along the Grant Avenue Parkway corridor. 

“This budget continues to focus on the resiliency of our systems and advancing the quality of life in the community through continued progress on the expansion of the SpringNet fiber network to provide high-speed broadband to our community,” Rector said.

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