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Independence, MO —
Independence Power & Light is facing a number of regulatory issues in the upcoming years, which also will likely affect customers with higher rates.
Increased costs passed along to customers include additional employees needed to comply with governmental regulations, software update expenses and the cost of conducting service studies, IPL Director Leon Daggett said Tuesday night.
In 2008, the City Council approved a five-year rate increase schedule, and on July 1, the last of those rate increases will go into effect. That additional revenue is included in the 2012-13 proposed budget.
An outside consultant, contingent upon City Council approval on June 4, will study the potential need for additional rate increases beyond this year.
In his proposed budget, Daggett outlined the following regulatory concerns to the City Council.
• Cross State Air Pollution Rule: Although this Environmental Protection Agency regulation was to take effect on Jan. 1, it’s on hold for now as the rule is tied up in the courts. If it had been implemented as scheduled, Blue Valley Power Plant 3 would have only operated using coal one month out of the year, instead using natural gas most of the time.
“...When this goes into effect, this is going to have a major impact on the electric industry and that means also on electric rates,” Daggett said.
• Industrial Boiler Maximum Achievable Control Technology: Also from the EPA, this issue affects the Missouri City plant and Blue Valley units 1 and 2 in IPL’s inventory. It is scheduled to take effect in the spring of 2014. Because Missouri City is incapable of using natural gas, it’s likely the plant will close, Daggett said.
• Oil tank: The “City Power & Light” 3 million gallon tank, although empty, will be torn down to avoid IPL employees needing to take a half-day of EPA-mandated training every year in case a spill were to occur.
“We made the decision that it just makes sense, rather than spend the ratepayers’ money that way, to just tear the thing down and get rid of it,” Daggett said. “...Some people probably think it looks ugly, some people probably think it looks nice, but it’s going to be gone.”
• Clean Energy Standard Act of 2012: The act, now before a U.S. Senate committee, could raise utility rates 64 percent during the next 20 years, if approved, Daggett said.
“This is another environmental train wreck coming our way,” he said.
The department’s sources for its $147.5 million in revenues include residential customers (52.6 percent), general service (44.5 percent) and industrial customers (2.9 percent). The largest expense in the department’s $108.4 million operating budget is fuel/purchased power (57.1 percent).
Independence Power & Light is facing a number of regulatory issues in the upcoming years, which also will likely affect customers with higher rates.
Increased costs passed along to customers include additional employees needed to comply with governmental regulations, software update expenses and the cost of conducting service studies, IPL Director Leon Daggett said Tuesday night.
In 2008, the City Council approved a five-year rate increase schedule, and on July 1, the last of those rate increases will go into effect. That additional revenue is included in the 2012-13 proposed budget.
An outside consultant, contingent upon City Council approval on June 4, will study the potential need for additional rate increases beyond this year.
In his proposed budget, Daggett outlined the following regulatory concerns to the City Council.
• Cross State Air Pollution Rule: Although this Environmental Protection Agency regulation was to take effect on Jan. 1, it’s on hold for now as the rule is tied up in the courts. If it had been implemented as scheduled, Blue Valley Power Plant 3 would have only operated using coal one month out of the year, instead using natural gas most of the time.
“...When this goes into effect, this is going to have a major impact on the electric industry and that means also on electric rates,” Daggett said.
• Industrial Boiler Maximum Achievable Control Technology: Also from the EPA, this issue affects the Missouri City plant and Blue Valley units 1 and 2 in IPL’s inventory. It is scheduled to take effect in the spring of 2014. Because Missouri City is incapable of using natural gas, it’s likely the plant will close, Daggett said.
• Oil tank: The “City Power & Light” 3 million gallon tank, although empty, will be torn down to avoid IPL employees needing to take a half-day of EPA-mandated training every year in case a spill were to occur.
“We made the decision that it just makes sense, rather than spend the ratepayers’ money that way, to just tear the thing down and get rid of it,” Daggett said. “...Some people probably think it looks ugly, some people probably think it looks nice, but it’s going to be gone.”
• Clean Energy Standard Act of 2012: The act, now before a U.S. Senate committee, could raise utility rates 64 percent during the next 20 years, if approved, Daggett said.
“This is another environmental train wreck coming our way,” he said.
The department’s sources for its $147.5 million in revenues include residential customers (52.6 percent), general service (44.5 percent) and industrial customers (2.9 percent). The largest expense in the department’s $108.4 million operating budget is fuel/purchased power (57.1 percent).
“This shows a need for continued efforts and involvement of our department in economic development projects to create a larger commercial and industrial base within the community,” Daggett said.
To keep energy sales in line with 2010 and 2011, Daggett said, “it’s important that we have a normal to warmer-than-normal year ... if the pain in my knees is any indication, we should have a nice, warm summer.”
Compared to the current fiscal year, next year, Power & Light will experience a $3 million increase in its operating budget because of increased fuel/purchased power expenses and increased labor costs.
“On the brighter side,” Daggett said, the city is aiming to convert more of its streetlights from mercury vapor or high pressure sodium to LEDs, which are more effective and consume less electricity. The department has issued a request for proposals for total conversion of the streetlight system, which are due by the end of May.
City staff will present the proposals to the Public Utilities Advisory Board, and Daggett said he anticipates bringing a proposal to the City Council by late summer or early fall this year.
“When installation is complete,” he said, “the city will experience considerable savings in the street lighting costs.”
