Contract will boost costs to Jackson

Jackson is among 30 other cities in the Missouri Public Energy Pool experiencing electric rate increases, but officials say joining the consortium is the best option for purchasing power.

City administrator Jim Roach challenges anyone to find a better deal.

"If I knew there were better deals, why would I push people into MoPEP? I live in the city, and I pay these rates, too," Roach said.

On Jan. 1, Jackson will join the MoPEP organization, which can negotiate and purchase power at a cheaper rate than cities could individually, said J.D. Lester, MoPEP member services coordinator.

MoPEP is part of the Missouri Joint Municipal Electric Utility Commission, which isn't controlled by the Missouri Public Service Commission. It can construct, operate and maintain generation and transmission facilities. The commission also can enter into contracts for power supply, transmission service and other services necessary for the operation of an electric bill, Lester said.

Jackson Power and Light has negotiated an energy contract with MoPEP that will supply at least 100 megawatts of electricity for three or more years. The new contracts with MoPEP will be more expensive than the city's current contract with Ameren Energy Marketing. But by joining MoPEP, it will reduce the city's costs for short-term purchases, which can be up to five times more expensive, Roach said.

Residents in Jackson will experience a series of three 12 percent rate increases over the next six months, which Roach said are necessary due to the rising costs of electricity. If the city stayed in its contract with Ameren Energy Marketing, the rate increases could have been more, Roach said.

The Jackson Board of Aldermen is expected to approve the rate increases at a regular meeting Monday. The board will also approve continuing the 10 percent discount for residents who pay by the 10th of the month.

The Missouri cities of Palmyra and Memphis have been in the MoPEP consortium since the mid-1990s. Both cities experienced rate increases, similar to Jackson's, earlier in the year.

"Every city has been dealing with high costs. It's a fact of life," said Loren Graham, Palmyra's president of the public works department. Palmyra residents saw a 25 percent rate increase on their electric bills in March.

At one point, Graham said Palmyra considered breaking its contract with MoPEP. Each city that joins MoPEP must give a five-year notice before breaking the contract.

"We gave the notice and started looking around, but we realized MoPEP was our cheapest option," Graham said. "It's probably a good thing we stayed in."

The city of Memphis, Mo. has a population of 2,100. Like Jackson, Memphis maintains its own electric distribution plant.

Mike Ahland, plant superintendent, said generating enough power to supply the city would be too expensive. MoPEP pays the city $1,200 per month for operating the plant during hours of high demand, regardless if the city generates the electricity during the month or not.

Jackson will receive the same incentive for operating its plant during the peak hours. Roach said residents would see an even higher increase if the city supplied power from its own electric distribution plant.

Ahland said the city of Memphis has seen a 33 percent increase in electric rates over the past several years.

"A lot of the increases are due to the high price of fuel. But the deal with MoPEP is working out pretty good," Ahland said. "We plan to stay with them."

MoPEP has contracted about 170 megawatts of less expensive power from new power plants being built in Nebraska, Illinois, Arkansas and the Kansas City area. The plants are scheduled to begin generating power by 2009.

"Once those facilities are built, we should be getting much cheaper power," Ahland said.

Roach said he understands why some residents may be shocked at the increased rates but MoPEP is the city's best option for purchasing power. "We're all going to have to deal with this. It's something that everyone's dealing with," he said.

jfreeze@semissourian.com

335-6611, extension 246