Springfield, MO

Log in Subscribe

City Beat: City Utilities seeks rate increases

Council is asked to approve utility’s request for electric rate hikes in each of next three years

Posted online

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 Sept. 5 meeting. 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 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 Sept. 30, 2024. That budget estimates $507 million in operating expenses and $546 million in operating revenue in 2024, compared with a 2023 revised forecast of $523 million in operating expenditures and $546 million in operating revenue.

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 at its next meeting, Sept. 18.

Museum expansion moves forward
For the Springfield Art Museum renovation and expansion project, council voted to use the construction manager at risk project delivery method.

City Architect Jennifer Swan said the project has a broad scope, as the current 50,000-square-foot structure is the product of four separate building projects over 50 years.

“Due to the challenging nature and potential complexity of the budget as well as the compressed project timeline due to federal funding requirements, it’s believed that CMAR delivery method will be able to benefit the project through constructability reviews, cost estimating, logistics, and scheduling and subcontractor coordination,” said Swan.

Among the criteria for selection of the construction manager are experience on CMAR project delivery and historic renovations, approach to various stages of construction, government contracts experience, proximity to and familiarity with the area, financial strength, qualifications, and notable awards and certifications. The request for qualifications was posted Sept. 7.

Bond redemption
Council voted to call and redeem public bonds issued in 2003 to fund a project at the Jordan Valley Ice Park at a savings to the city of approximately $200,000 in interest costs and fees. City Finance Director David Holtmann reported the bonds were currently outstanding in the amount of $2.4 million prior to their maturity on Oct. 12, 2023. The council vote appropriates $1.2 million in hotel/motel tax funds to pay for the bonds, as that is the remaining balance after this year’s scheduled payment.

Holtmann said the city’s debt policy allows the refunding of outstanding debt if the present value savings is approximately 5% of the principal amount being refunded. He noted the variable rate interest costs have increased to over 5.5% from approximately 1% of the outstanding balance.

Councilmember Matthew Simpson noted the estimated savings are based on the current interest rate, which could go up, and Holtmann agreed. Answering a question from Councilmember Abe McGull, Holtmann said there is no prepayment penalty on the optional redemption bonds.

The bonds are held by UMB Bank.

Airport marketing funds
Council accepted state funds to market the Springfield-Branson National Airport.

The Missouri Highways and Transportation Commission granted $250,000 to the airport for promotions, with matching funds of $28,000 to be provided by the airport board.

Kent Boyd, the airport’s director of marketing and communication, said the state collects sales tax on jet fuel, and each year it directs a portion of those funds to airports offering commercial airline service. The airport has received several grants throughout the 25 years of the program, he said.

Other action items

  • Council heard first reading of a bill to give City Manager Jason Gage a pay increase to $268,000 a year, up from the current salary of $246,000. He was hired to the position in 2018 at an annual salary of $220,000, according to past Springfield Business Journal reporting. Council is scheduled to vote on the measure at its next meeting.
  • Another vote scheduled for the Sept. 18 meeting would expand membership eligibility on the city’s Landmarks Board. The measure expands eligibility to include anybody who is employed full time as an architect, real estate agent, historian or architectural historian, in addition to residents, merchants and property owners of the district. The Commercial Street Historic District representative seat has been vacant for over a year, and city staff believe expanded eligibility would help to fill the vacancy, according to the staff report on the council bill.


No comments on this story |
Please log in to add your comment
Editors' Pick
Business Spotlight: Cool Under Pressure

Realtor reinvents her career with cryotherapy business.

Most Read Poll
Do you plan to make a charitable donation by year's end?


View results

Update cookies preferences