(KANSAS CITY, Kan.) — The Board of Directors of the Kansas City Board of Public
Utilities recently adopted a proposed adjustment to electric and water base rates to
meet future revenue requirements for the utility, an optional “Green Rider” program
allowing large commercial and industrial customers to purchase energy from
Environmental Attributes (EA) to meet their renewable energy goals, and modification
of the Energy Rate Component (ERC) rider allowing for additional recovery to build
and maintain a new ERC reserve fund.
The modifications were necessary to maintain the integrity of the utility’s electric and
water transmission, distribution, and production systems, and to meet growth needs in
the community over the next five years. Passage of the adjustments followed an
extensive and lengthy open public rate hearing process which included utility, subject
matter expert, and public inputs on the recommended proposals by external third
parties.
While increases will vary among customer groups based on costs of service and usage
levels, the BPU Board has finalized a recommended 2.5% annual increase in 2023 and
2.5% in 2024, and an annual increase in water base rates of 6.0% in 2023, 6.0% in 2024
and 6% in 2025. These adjustments were based on future electric and water utility
revenue requirements and cost of service reports that were completed by outside
industry experts to determine rates necessary to support future water and electric
operating and capital costs over the next five years.
BPU has not previously increased water rates since 2013 (a decade ago), and electric
rates have not been adjusted since 2018. The utility has also taken concerted steps to
control costs and streamline operations over time, without threatening service
interruptions or future growth needs. This includes significant reductions to historic
annual budget spending and staffing levels.
A public hearing notification process was initiated in early 2023. Based on proposed
Cost-of-Service (COS) rate studies conducted by external parties, BPU staff
recommended several adjustments. Two formal public hearings were held on June 14th
and June 15th, 2023, providing opportunities to discuss potential rate adjustments, a
new “Green Rider” to promote increased renewable energy usage, fuel cost
procedures, ERC modifications, and needed electric and water capital improvement
projects. Following this process, which was extended for additional review and
consideration, the BPU Board of Directors adopted the recommended rate adjustments
at its regular Board meeting on July 19, 2023.
The recent electric and water base rate adjustments, the optional new “Green Rider,”
and ERC modifications were necessary for a variety of reasons, including among
others:
- BPU needs to invest more than $180 million in non-environmental capital
improvements to maintain the integrity of its electric utility system.
- The utility has not adjusted electric rates since 2018, nearly five years ago, and
rates are competitive with the national average and that of surrounding
utilities and their current rate proposals.
- BPU’s water system needs more than $135 million in capital improvements to
keep it running efficiently, to meet regulatory requirements, and to meet
future demand levels.
- BPU has not adjusted water rates since 2013, more than 10 years ago, while
other utilities have repeatedly proposed and implemented increases.
- Postponing electric and water rate adjustments any longer would delay capital
and aging infrastructure improvements needed to support new growth in the
community and may cause delays or service disruptions in certain areas.
- Inflationary pressures on costs of outside services, materials, and labor
continue to increase – with delayed improvements costing even more in the
future.
- The COS studies recommend an electric operating reserve fund of 120 days
cash-on-hand to maintain financial stability. Without a strong credit rating and
financial position, BPU will not be able to borrow money for capital
improvements at a reasonable interest rate.
BPU remains one of the top-ranked publicly owned utilities in the nation, providing
affordable and reliable energy for more than 110 years. Today it services 65,000
electric customers with two power stations, 29 substations, 16,500 transformers, 3,000
miles of electric lines, 19,000 streetlights, and 5,300 traffic signal heads. The utility’s
water operations service 53,000 water customers with one Water Treatment Facility,
three pump stations (72 MG a day), 1,000 miles of water lines, 6,200 fire hydrants, and
20 MG in reservoirs and tanks.
For additional information about the public hearing process and COS studies, go to
www.BPU.com.
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.