(KANSAS CITY, Ks.) — The Board of Directors for the Kansas City Board of Public Utilities (BPU) has adopted several proposed adjustments to electric and water base rates, to meet future revenue requirements for the utility.

The BPU Board recently adopted a 7 percent increase in electric base rates across all classes for July 1, 2010. In addition, the Board adopted an interim rate adjustment of 7 percent in 2011, 2012, and 2013, but acknowledged that these “pending” rate adjustments in 2011, 2012, and 2013 may change as the utility continues to negotiate with intervenor customer groups over the next several months. The utility estimates that the 2010 adjustment will increase the average residential electric customer’s bill by $4.42 a month in 2010, a little more than a dime a day.

 

The BPU Board also adopted an 8 percent increase in the water base rate for July 1, 2010. In addition, the Board adopted an interim rate adjustment of 8 percent in 2011, and a 7.5 percent increase in 2012 and 2013. These are also “pending” rate adjustments per discussions with the intervenor customer groups. The utility estimates the average residential customer’s bill will increase $3.42 a month in 2010. This equals approximately a dime a day.

 

These adjustments were enacted following a lengthy public hearing and community outreach process initiated in February 2010, and included two public hearings on May 3 and May 4, as well as three community forums on April 15, April 19, and April 20. The intent of these public forums and hearings was to share information with customers, stakeholders, and the community, while affording an opportunity for comments, inputs, suggestions, or questions on the potential adjustments.

 

The recent adjustments were based on a comprehensive Cost of Service and Rate Study completed by Black and Veatch, a global engineering and consulting company, which forecasted the revenues needed to maintain BPU’s electric and water operations through 2014.

 

Over the next five years, BPU’s 50-year old electrical system will require more than $250 million in capital improvements. Postponing or delaying these improvements further may cause service disruptions or cost even more in the future. Without electric rate adjustments, BPU would not be able to adequately finance much-needed capital improvements and meet its cash reserve and debt service requirements.

 

“BPU electric rates are currently well below the national average and lower than most surrounding utilities,” said David Mehlhaff, public affairs officer for BPU. “Based on external recommendations, and with more than $300 million in capital improvements needed to maintain the integrity of our utility systems over the next five years, adjustments were necessary at this time.”

 

In addition to the electrical system requirements, BPU’s 100-year old water system will require more than $60 million in capital improvements over the next five years to replace outdated control systems and aging water mains, and to implement critical meter improvements.

 

BPU has been committed to fiscal responsibility, cutting costs, and improved efficiencies over the last several years. For example, the utility cut its spending by $25 million from 2009 to 2010, and slashed its overall budget by $55 million (16.5 percent) over the last five years. In addition, BPU has eliminated staff for the last five years in a row, going from 722 positions in 2006 to 678 positions in 2010, a reduction of 44 positions.

 

“As a not-for-profit publicly owned utility, BPU has a responsibility to ensure the long-term reliability and dependability of utility services to this community,” said Mehlhaff. “Moreover, BPU is, and will remain, committed to cutting costs and improving utility efficiencies, just as it has for the last several years.”

 

About BPU
BPU’s water department was originally created in 1909, and its electric utility was operational in 1912. The purpose of the utility, then and to this day, is to provide the highest quality electric and water services at the lowest possible cost. Today the publicly owned utility serves approximately 65,000 electric and 51,000 water customers, primarily in Wyandotte County, Kansas. The mission of the utility and its employees is “to focus on the needs of our customers, to improve the quality of life in our community while promoting safe, reliable and sustainable utilities.” BPU’s Web site is www.bpu.com.