A city analysis of the financial stability of IPL for the next five years, utility service rates in the city should increase by 9 percent beginning Jan. 1 and by an additional 5 percent yearly until 2012.
Independence Power and Light customers may have to brace themselves for a top of the year rate increase in electricity services.
City Manager Robert Heacock said a comprehensive and objective cost of service analysis of the IPL’s current rate plan determined, for the financial stability of IPL for the next five years, utility service rates in the city should increase by 9 percent beginning Jan. 1 and by an additional 5 percent yearly until 2012.
“Essentially, where we are is we need to respond to market increase in cost,” Heacock said, “and we have to cover our basic maintenance needs in planning for the future in order to meet our goal of providing reliable power to our citizens.”
Heacock said the first reading of an ordinance for the possible rate increase will be heard Nov. 3 and voted on by the Council two weeks after that.
Currently, Heacock said, the average monthly rate for a residential IPL customer is $117.97. A 9 percent increase would raise a customer’s bill by about $10. A 5 percent increase after 2009 would increase the average monthly bill another $5. The rate increase, if approved, would still be lower than the average monthly rates for Aquila customers, as well as rates from Kansas City Power & Light, Heacock said.
The study, conducted by Sawvel, a utility expert company, also noted because of the city’s aging infrastructure the city has to be proactive in its planning approach to maintain the facilities. The study also concluded the city must maximize the resources available and implement rates that provide financial strength and a favorable credit rating to provide safe and reliable electric service.
“If we don’t protect our assets for not preparing properly, we are going to be in trouble,” Council Member Lucy Young said. “Our facilities would be an extreme liability if we don’t prepare.”