Independence is looking at some big decisions on the production and price of electricity. Those decisions will affect the business climate in the community for decades.
Mayor Eileen Weir says the city is committed to “competitive, reliable, clean energy.” Those three priorities will pull decision-makers in different directions, so it’s a challenge. There is a general recognition that the price of electricity has to be addressed to make the city more attractive to business.
Late this month, a consultant is going to urge the City Council to begin phasing out the 60-year-old Blue Valley power plant on Truman Road. It’s old and expensive – but things aren’t that simple.
Assistant City Manager Mark Randall and others kicked around the issues at a meeting convened by the mayor last week.
Here’s the math: IPL saves money by buying power through the Southwest Power Pool, a regional group. The pool looks at a day’s projected electricity demand and tells members to switch on plants A, B or C, starting with the cheapest and most efficient. Even after the switch from coal to gas a couple years ago, Blue Valley is seldom called on – about 2 percent of the time.
“It’s one of the last things they want fired up,” Randall said.
The catch is that Independence has to maintain the capacity to produce 340 megawatts a day -- its all-time peak usage day plus a bit of a cushion. With Blue Valley gone, it would be 58 megawatts short.
“So that’s really the whole challenge,” Randall said. “If you shut down that plant, you have to find 58 megawatts somewhere.”
IPL also gets power from two large coal-fired plants outside the city, a gas-fired plant south the metro area, wind power from Kansas and solar power in the city.
The city is expected to issue what in government is called a request for proposal, soliciting private-sector ideas to replace that 58-megawatt gap.
“And it’ll show clearly what is the cheapest way to replace those megawatts,” Randall said.
The City Council continues to believe that the city having its own electric utility, along with the water utility, holds long-term advantages for development.
That’s a good theory, but rates – and IPL has two dozen different rates – are higher than KCP&L’s in Eastern Jackson County (though lower than in Kansas City). In another words, the advantage goes to Blue Springs and Lee’s Summit on that one piece in attracting business. It’s not the only piece, but it’s important.
So the city is studying rates, too, though Mayor Weir is keen to jump on the idea that people hear “rate study” and assume that means “rate increase.” That’s not the case, she said.
“It’s a cost-of-service study,” she said, adding, “Our goal is to make our rates more competitive.”
Randall says IPL has too many rates.
“So we need to bring order to the chaos,” he said.
Here’s the thing: The customers of state-regulated monopolies such as KCP&L and Spire deserve to have a transparent and understandable rate structure. Shouldn’t the bar be at least that high for a utility owned by the citizens?
There are other ways to save money, too.
The city has cut about 20 IPL positions in the last few years, saving about $3 million a year. The City Council is once again looking at “smart meters” -- which you might think it’s already worried over long enough -- which also could save millions.
The Blue Valley plant has about 45 employees, with more than a dozen open positions, as city officials have known the decision to close has been nearing. Still, even if the city decided to close it tomorrow, it would take time to wind things down.
“We’re hopeful that human impacts will be minimal,” Randall said.
The city says it has a model that works: the water utility, with its 28 wholesale customers to help hold down rates for homes and businesses, which City Manager Zach Walker says is “one of the best bargains in the metro.”
That’s what IPL needs – more big industrial customers, which also would mean more local jobs and more local economic activity overall.
“That’s the model we’re chasing down,” Walker said.
Jack Figg, now retired from a long career in manufacturing, most recently at Lake City, said the ability to cut deals for companies wanting to come here is what unlocks the value of the city owning its utilities.
“The example’s water,” he said.
Jeff Fox is The Examiner’s editor. He’s at 816-350-6365 or firstname.lastname@example.org.