Jackson Board of Aldermen consider electric rate reduction

Jackson utility customers will see a rate reduction in their electric bills, averaging 11.5%, starting next month if the city’s Board of Aldermen accepts a consultant’s proposal to do so.

At their study session Monday night, the aldermen discussed a recommendation from a utility consulting firm, which said the city can afford to lower its municipal electric rates because it will soon be paying less for the power it purchases.

“Based on our preliminary assessment of the city’s forecasted electric utility costs as provided to us by MPUA (Missouri Public Utility Alliance), power supply costs are expected to reduce by approximately 10 percent beginning in July of 2021,” said Adam Young, director of finance and rates at 1898 & Co., a subsidiary of Burns & McDonnell Engineering of Kansas City, Missouri, in a letter last week to Jackson city administrator Jim Roach.

“Without any rate reductions, the city will continue to build reserve levels beyond its target balance requirement,” Young wrote and said “an immediate rate revenue reduction is financially feasible and advisable.”

Appearing before the board Monday night, Young said the 11.5% rate reduction will lower Jackson’s utility revenue by about $1 million during the second half of this year and by a little more than $2 million in 2021, but he noted the reserve funds generated by utility sales are more than sufficient to accommodate the rate cut.

According to Jackson Mayor Dwain Hahs, the city can afford to reduce the electricity rates thanks to the lower rates the city will begin paying to MPUA beginning in July 2021.

“It’s a good thing we can pass along (to our customers),” Hahs said. “We have a very good electric company and when it produces a surplus, we keep a portion of that to be sure we can pay for new lines and make necessary repairs, but we don’t want to charge more than we have to.”

Hahs said the rate cut will also allow Jackson’s utility company to remain competitive with other municipal utilities.

Jackson is one of a small number of communities operating their own electric utilities and has been doing so since 1905. The city’s electric department serves 7,367 metered customers in an 11-square-mile service area, maintaining 40 miles of transmission lines, 161 miles of overhead distribution lines and 69 miles of underground lines. It has more than 3,500 utility poles, nearly 2,000 streetlights and four substations.

“We measure ourselves on a regular basis against other electrical companies in the region,” Hahs said. “We felt we were a little high, so this is an opportune time for a rate reduction.”

The aldermen will vote on the rate reduction proposal at their June 15 meeting.

If approved, rates for residential customers would be reduced by an average of 10%, small commercial customers would see a 12.5% rate cut while industrial and large commercial customers would see a 15% rate reduction.

Prior to their study session, the Jackson aldermen took action on several matters during their regular business meeting, including:

• Acceptance of what was described by auditors as a “routine” 2019 audit report for the city as prepared by the accounting firm of Beussink, Hey, Roe and Stroder LLC.
• Acceptance of the North High Street (U.S. 61) and Deerwood Drive intersection traffic study prepared by the Lochmueller Group of St. Louis.
• Approval of a cooperative purchasing agreement and contract with SAK Construction LLC of O’Fallon, Missouri, in the amount of $97,487.50 for the city’s 2020 sanitary sewer lining program.

The board also held a public hearing to consider the voluntary annexation of 357 Timber Lane as submitted by Todd Johnson and Kaci Jo Sparkman. The board will vote on the request at a future meeting.

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