City Utilities seeks rate increases 

Electric rate increases may be on the way for customers of City Utilities of Springfield. 

Springfield City Council held a public hearing on an ordinance to revise electric rates at its meeting last night. The proposed increases are 4.8% in 2024, 4% in 2025 and 3.9% in 2026. 

In an explanation to council submitted by CU, executives noted the last electric base rate increase was approved in September 2013 and became effective in October 2016. 

“It’s been 10 years since the last base rate increase was approved by the board and council,” said Austin Beshears, CU’s acting director of rates and fuels, in his remarks to council, referring to the Board of Public Utilities that oversees CU. “Per past guidance of City Council, it’s traditionally been City Utilities’ intent to propose relatively smaller increases more frequently and taking them in over three years.” 

Unique circumstances have led to a longer period between increases, he said. 

The written report notes that operating costs across the board have increased since the last rate adjustment, primarily driven by the impact of normal inflationary pressures. It adds that from 2016 to 2022, the total compound inflation was 21.5%. 

The need to raise rates was identified during development of the fiscal 2021-25 operating plan, the report states, but CU opted instead to temporarily slow spending and delay plans for rate adjustments due to the uncertainty of the financial impact of the COVID-19 pandemic on customers. In early 2021, revenue from off-system electric sales to other utilities during winter storm Uri funded reserves that allowed CU to further defer an electric rate increase. 

The average monthly bill for a residential electric customer using 900 kilowatt-hours per month is currently $97.97, according to officials. That bill would increase by $4.99 per month in 2024, $4.96 in 2025 and $4.79 in 2026, for a new average monthly total of $112.71, according to the proposed rate schedule. Officials note customers outside of city limits pay 5% more for electricity. 

Nonresidential bills vary based upon usage, demand and rate class, officials say. 

“Generally, higher load factors are associated with lower impacts,” the report states. “These impacts will vary greatly due to the diversity of size and load characteristics of nonresidential customers.” 

The rate proposal followed a hearing on the CU operating budget for the fiscal year ending September 2024.  

CU’s fiscal 2024-28 operating plan outlines $113.5 million in major electric projects, according to officials: $33 million for maintenance of CU’s local power generation assets; $20.5 million for vegetation management; $19.5 million for pole maintenance and replacement, working toward a 50-year replacement cycle; $17.5 million for substation transformer and switchgear replacements; $13 million for the construction of a 161 kilovolt transmission line from the Republic substation to the Partnership Industrial Center-West substation; and $10 million for the purchase and installation of distribution transformers. 

Council is scheduled to vote on both measures Sept. 18.