Jackson hearing to review electric rate plans

~ Federal deregulation policy among reasons for proposed increase.

Jackson residents -- already paying 25 percent more per year in electric rates than residents in Cape Girardeau -- can expect even higher utility bills in the near future.

Last week, Jackson city administrator Jim Roach reviewed rate revision plans that propose a series of three rate increases, an increased meter-reading fee and the elimination of the 10 percent discount for residents who pay bills early. The community is invited to a public hearing at 7:30 p.m. today to voice comments or concerns about the electric rate increases.

Consultants with Burns and McDonnell of Kansas City, an engineering firm that conducted the electric rate study, will be at the public hearing to answer questions.

Alderwoman Barbara Lohr hopes for a large turn-out at the public hearing. "We need them to express their opinions, and we need to let them know the options," she said. "We do have to increase rates but maybe our folks will have some other suggestions."

The consultants recommended that the aldermen increase electric rates by 11.5 percent over a six-month period, with the first increase on the Oct. 1 electric bill. The following increases would be included in January and March bills. All rate increases would be across the board, meaning homeowners, businesses and industries would pay the same rate increases.

Additionally, the consultants recommend eliminating the 10 percent savings customers receive if they pay by the 10th of each month. About 75 percent of Jackson residents use the early pay discount program, which amounts to $800,000 annually. It was also suggested the aldermen increase the $5 meter-reading fee to $7.50 per month.

Electric rates are measured in monthly readings of kilowatts per hour. The average residential energy consumer uses about 1000 kwh per month, said Mike Cleary, Ameren spokesperson.

Jackson's current rate schedule bills customers approximately 9.5 cents for the first 150 kwh used during one month. The next 530 kwh used in a month are set at 7.8 cents.

In Cape Girardeau, Ameren's customers are charged 7.64 cents per kwh used during a four-month summer billing cycle. Winter rates, from October through May, are 5.42 cents per kwh for the first 750 kwh used. Anything more than 750 kwh, is 3.66 cents per kwh.

Jackson, which operates its own electric distribution plant, is a wholesale customer of electricity. The city's electric distribution plant generates approximately $10 million per year in revenue to fund various city departments, including police, fire, parks and recreation, library and sanitation. The electric revenue offsets other taxes in the city, said Don Shuette, director of electric utilities.

The city of Cape Girardeau is a retail customer of Ameren, which filed for a 17.7 percent rate increase with the Public Service Commission in July. Unlike Cape Girardeau, the city of Jackson must negotiate with wholesale electric markets when purchasing electricity, another reason for the different rate hikes between the two cities, Cleary said.

"Because we generate our own power, that gives us more control over it. We are able to keep the generation costs down, but even those have increased," Cleary said.

Even though all energy producers and providers are increasing their prices, the large generating units can produce electricity cheaper than small diesel or natural gas units like Jackson Power and Light, city administrator Jim Roach said. "Jackson customers would pay much more for electricity if we relied solely on our small units for all our energy needs," he said.

Jackson officials have cited federal energy policies on deregulation is another cause for the higher rates.

Roach explains that Missouri is a not deregulated state, meaning large electric companies like Ameren are regulated by the Public Service Commission. Because Jackson operates its own electric distribution plant and is not regulated by the PSC, it throws the city into the deregulated market, he said.

"In a deregulated market, prices are being driven by supply and demand. The choices we have to buy power from are coming from the deregulated side of the business," Roach said. "It's really put us into an unfair situation."

Shuette said electric rates have steadily increased across the country because of deregulation.

"At one point, we had an abundance of electric in the Midwest. Deregulation took the cheaper power out of the Midwest and exported it to the East and the West coasts," Shuette said. "Deregulation means everybody is at the mercy of the market."

When the Jackson's contract with Ameren Energy Marketing expires at the end of the year the city will sign a new contract with the Missouri Public Energy Pool. An electric supplier for 26 cities across the state, MoPEP will be the cheapest supplier for Jackson, Roach said.

"We've been very competitive with our electric rates in the past, and right now we're taking the brunt of it. But over the next few years, and once the market stabilizes, we're going to be in a very good situation with MoPEP," Roach said.

jfreeze@semissourian.com

335-6611, extension 246