City Council Approves a 4% rate reduction effective Aug. 1

The Independence City Council approved a 4% across the board electric utility rate reduction by a 6-1 vote at its May 13th meeting.

The amount was less than the three-year 10% reduction which City Council member Mike Huff, but he supported the lower amount at the meeting.

The 4% reduction is approximately $5.5 million based on projected annual IPL revenue of $137 million.

The rate reduction directs the City Manager to identify cost savings at Independence Power and Light to offset the rate reductions. The City Council debate is in the video below.

That same evening a preliminary rate study was presented by Burns McDonnell which recommended against rate reductions larger than 2%.

Independence City Council, by a vote of 6-1, approved a 4% reduction in electric utility rates effective Aug. 1.

Updated Nov. 16, 2018 - The Public Utilities Advisory Board supports rate reduction proposal advanced by City Council Member Mike Huff.

City Council Considers IPL Rate Reductions

The Independence City Council is poised to consider actions to reduce commercial and industrial rates to make them more competitive - potentially saving the large-scale customers $3 million annually.

The effort is being led by Council member Mike Huff, a former senior manager at IPL who was elected in April.

Table from 2015 Sawvel Rate study

Table from 2015 Sawvel Rate study

Huff wants the City Council to adopt the general provisions of a 2015 rate study which was tabled by the City Council.

Huff, in a media release, stated:

“The rate decrease I am proposing incorporates the Sawvel and Associates report and it is my belief that the City charter requires that the electric utility shall apply any and all annual surpluses to rate reductions. If this proposal is adopted by my Council colleagues, it will be the first time in decades, if in not the history of the City that the City Council has granted our rate payers a reduction in their utility rates.”

Huff reference is to Section 3.17 of the City Charter. (See language)

Independence City CHARTER

Independence City CHARTER

The proposal will be presented to the Public Utilities Advisory Board at is Nov. 15 meeting and the City Council will consider a resolution Nov. 19th.

IPL currently has few commercial and industrial customers - larger utility users which can help the overall electrical system balances generating loads and make the overall utility more competitive.

Huff, in an Examiner article, stated: “They've (industrial and commercial customers) got the biggest burden. We do this effective immediately, then (later) reduce residential rates. Everyone needs to be patient. This is the first step to making it right for the citizens.”

A current cost of service study by Burns and McDonnell is underway.

IPL provided a rate comparison in August 2017. Here’s the comparison for large general service customers and also residential.

Large General Services Rates April 2017.jpg
Residential Rates April 2017.jpg

IPL rates, in general, are higher than other area utilities including the investor-owned Kansas City Power and Light. IPL commercial and industrial rates are not competitive and IPL has a complicated rate structure.

In September 2015, the City Council voted unanimously to indefinitely postpone changes in IPL rates in September 2015 but there is growing pressure to make changes in the rates.

The 2015 rate recommendations faced opposition to changing a $4.14 minimum monthly bill to a $14.50 monthly customer charge.

The council took several months to review and better understand recommendations included a May 2015 rate study done by its long-time IPL rate consultant.

At that time, Indy Energy provided the council with several policy recommendations for consideration - including supporting rate reductions for commercial and industrial customers - during 2015 public hearings.

Others presenting included representatives from the AARP, the Natural Resources Defense Council and the Eastern Jackson County Justice Coalition.

There was broad agreement on opposing increasing the fixed customer charges as creating financial burdens on low-income, fixed income and low-energy users and discouraging energy conservation.

Others spoke in favor of developing energy efficiency programs, increasing utility assistance and more renewable energy.

The last major rate change was approved in 2008 when a series of year-to-year rate increases were approved. Read KC Star article about the 2008 rate approval.

Public Power is Suppose to Cost Less

In general, publicly owned power costs less based on national analysis by the American Public Power Association.

The APPA study shows that residential customers of investor-owned utilities paid average rates that were 14% higher than publicly-owned systems.

Currently IP&L residential rates are higher than the investor-owned Kansas City Power & Light.

Data came from 2,006 publicly owned electric utilities, 193 investor-owned utilities and 873 cooperatives from across the nation.

Other information

A benchmarking study by the Board of Public Utilities (Kansas City, KS) included cost and operating comparisons to IPL.

IPL officials differed with many of the figures in the BPU report which was done by an independent firm.

Independence Power and Light Rates Comparisons (2005-2014)