CU CEO projects 3% rate increase as utility adds $280M in capacity

City Utilities of Springfield is planning to implement a rate increase for customers as it brings $280 million in capacity-building projects online.

CU President and CEO Dwayne Fulk discussed the power supply initiative, federal government funding and tariffs during an interview yesterday with Springfield Business Journal Executive Editor Christine Temple. The live interview was held for SBJ's 12 People You Need to Know series at The Backlot, Alamo Drafthouse Springfield's restaurant and bar.

The Board of Public Utilities, which governs CU, in September approved the $280 million in power supply projects that comprise three 50-megawatt gas turbines to be installed at the CU-owned McCartney Generating Station, near Strafford, and 36 MW of battery storage within the CU system. In January, the board followed up with the approval of a lease-purchase financing arrangement for the projects.

Asked yesterday about the financial impact on customers, Fulk said final figures are still being determined.

"We're refinancing our bonds that currently exist on John Twitty Energy Center. Depending on the savings we get from that, we're looking at about 3% in 2027 and 3-point-something percent in 2028," he said. "Right now, the bond market is very volatile, and so we're not sure exactly how that will go."

Fulk noted customers would not be charged until 2027, when the projects are online.

The power supply projects, Fulk said, would help CU meet required increases in its planning reserve margin as dictated by the Southwest Power Pool.

"In order to do that, we have to provide 36% more power than our customers actually use starting in 2026," he said.

The capacity-building projects are likely to be impacted by tariffs, Fulk said.

"For our future power supply projects, $280 million, we're currently budgeting $5 million in tariff impacts," he said. "That seems very low, but those types of projects are very low on the priority list for tariffs currently."

Also impacting CU on the federal level is grant funding.

Fulk said a project that calls on the replacement of aging natural gas pipes in Zone 1 is on hold. CU held a groundbreaking ceremony in September 2024 for that project. Funding was announced from the Pipeline and Hazardous Materials Safety Administration, a division of the U.S. Department of Transportation.

"That's a $30 million project. We're very hopeful that that will become unfrozen soon," Fulk said.

He noted that CU grants from the Federal Transit Administration are not currently on hold.

Additionally, CU is keeping an eye on potential deregulation by the U.S. Environmental Protection Agency. CU, Fulk said, plans for decades out when it comes to infrastructure and supply.

"We're not sure what's going to happen from administration to administration, except that the pendulum swings farther and faster," he said. "We use as our guidepost what's the right thing to do for our community."

At the end of the event yesterday, SBJ announced Mayor-elect Jeff Schrag would be the May 20 guest for the 12 People You Need to Know series.