Memphis History with Mopep Newspaper Reports

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Memphis History With MoPEP – NEWSPAPER reports

October 31, 2002

Former State Officials Backing Amendment 4

Amendment 4 on the November 5th ballot in Missouri has earned the backing of former Secretary of State Bekki Cook and former State Auditor Margaret Kelly, as part of the Yes on 4 Committee. They are urging the passage of the amendment, which they say has no cost to taxpayers and will help many Missourians by saving millions of dollars in utility costs.
The group argues that the Amendment would enable city-owned electric and natural gas utilities to develop projects in partnership with other utilities without losing local control of their interests in the projects. Members in the Missouri General Assembly were almost unanimous this year in voting to submit the proposal for voter approval.
"Margaret and I are pleased that Amendament 4 is attracting such broad support from all sectors of Missouri," Cook said. "We haven't seen any opposition to the proposal. I think any voter will support it if they get the word about what it means."
Missouri has 88 municipally owned electric utilities, including the City of Memphis, serving approximately 400,000 families and businesses. Municipal natural gas utilities serve more than 100,000 family and business customers.
Cities say that they could save costs on power plants and other new facilities by partnering with each other or any Missouri utility as proposed in Amendment 4. The cities control their own utility costs and rates and would continue to do so under the Amendment.
The City of Memphis is a member in the Missouri Public Energy Pool (MoPEP) along with 23 other cities. MoPEP voted in April to build a new, jointly owned electric power plant if state law would allow it. The group currently buys power jointly as one unit.
Legislation and a statewide vote on the constitutional amendment are necessary to assure the cities' ability to retain local control of the project while financing it jointly.
"We're very encouraged and grateful for the legislature's attention to our citizen's needs," said MoPEP Chairman and Shelbina City Superintendent Dennis Klusmeyer. "Wholesale power markets have become highly volatile, and we need to diversify by having some power available at the cost of production."
Proponents of the Amendment state that Missourians will benefit from the law by helping avoid reliance on out-of-state power sources, while promoting more environmentally-friendly energy resources, and at the same time creating jobs for Missouri workers.
"For more than 14 years as the State Auditor, my job was to find savings for Missouri taxpayers, and Amendment 4 will save money in thousands of Missouri family budgets," Kelly said.

November 14, 2002

Department Reports
LIGHT - A recent test ran at the Memphis City Light Plant will significantly increase the purchase credits the city receives for its power generation capabilities. As a member of the MoPEP cooperative between other municipal power suppliers in the state, Memphis purchases power jointly with all MoPEP members to secure better buying power.
Previously the city was receiving credits based on a 6.7 megs rating. The recent test secured a 9.3 megs rating for the city power plant, meaning Memphis will earn approximately $30,000 more in the credits earned per kilowatt hour generated.

August 21, 2003
National Blackouts No Worries For City Residents Thanks To Memphis Light Plant
More than 50 million people lost electrical service in eight different states and part of Canada when the biggest power outage in United States history struck Thursday, August 14. Here in Memphis, residents were weathering the hottest stretch of the year and didn't miss a second of air conditioning or power service of any sort.Even if the power outage had spread to impact Missouri, which it didn't, residents of the City of Memphis can rest easy because of the security of knowing the local light plant can take care of all their power needs.
"We have no trouble taking care of the town," said plant superintendent Mike Ahland. "Our generators can cover all of the city's needs with electricity to spare."
Ever since the light plant's restructuring project, which was completed roughly a year and a half ago, the facility has nearly doubled its power production capabilities to serve the community. The project included the installation of two new transformers for the substations as well as a new breaker in the plant to allow improved transfer of the electricity generated by the plant.
"If they have a blackout somewhere and we get pressed into action all we have to do is open up a couple of switches to isolate us from the rest of the world and then we could send out our power to run the entire city," Ahland said.
In all, the city maintains 10 generators at the light plant. They all run on diesel fuel with three also having the capability to run on natural gas if necessary. At peak output the generators can combine to produce an output of 9.2 megawatts. Ahland indicated that roughly five megawatts will serve the entire city of Memphis. Normally the city purchases power through the MoPEP power consortium of Missouri municipalities that have joined together to provide stronger buying power for better prices. Generally the power for this area is purchased from Northeast Missouri Electric Cooperative in Palmyra.
However under the MoPEP agreement the group is always searching for the best price for power. At points when the price goes higher than normal the city is pressed into service to generate for local users as it becomes more cost effective to run the generators than to buy power. On Friday last week the plant generated for roughly 90 minutes with another four-hours of running on Monday.
"We have generated more this year than we did last year but we still haven't caught up to 2001 when we ran an awful lot," Ahland said.
Not only can the Memphis Light Plant keep Memphis running but nearly half of the power generated at peak performance can be offered to MoPEP for sale to other customers if the need arises.

August 10, 2006
Rising Electric Bills Are Shocking Memphis Residents
“Why are our rates so much higher than everyone else around us?” That was the question restaurant owner Kelly Nelson poised to the Memphis City Council on August 3rd regarding growing electric bills. And she wasn’t the only one asking the question. Nelson presented a petition, demanding the city address the high rates, complete with 267 signatures.
“And we just started the night before last,” Nelson said regarding the popularity of the cause. “So you know there are plenty more people interested in this issue.”
Customers in the City of Memphis have witnessed electric rates increase from the base rate of $0.0877 per kilowatt hour (kWh) established back in 2001 to the most recent adjusted cost of $.1321 per kWh in June 2006. That represents an increase of roughly 33 percent.
The City Council attempted to explain to the public at the meeting, that this increase is 100-percent related to the cost of energy.
“The increase you have seen in your bill is caused by a surcharge that the city is collecting so it can meet its expense to buy the electricity,” stated Alderman Chris Feeney. “The surcharge simply allows the city to collect nearly as much as what it is turning around and paying to the electricity provider. We cannot sell the electricity to the customer for less than it costs the city.”
Therein lies the problem. Since 2001 when the current rate level was established, the price of electricity for the City was $0.0482 per kWh in October. In November and December that rate fell below the established base rate, meaning citizens saw a negative surcharge, or in essence, received a rebate because of the low rates. Since then the rates have been on the rise. By July of 2004, citizens were paying a $0.0097 per kWh surcharge as the cost of buying power had risen by nearly a penny per unit. Recently the cost crunch has become extreme, creating the latest surcharge of more than four cents per kWh.
Local customers are not alone in the dilemma. Fellow MoPEP member, Palmyra has implemented two price increases, totaling more than 33-percent in the past 12 months, including a 25-percent price hike approved in May.
In June 2001, the last time power rates were adjusted in Memphis, the city set the rate at $0.0877 per kWh after the minimum charge of $7.71 for the first 50 kWh. Of that base rate, $0.0437 was established as base power cost factor, meaning roughly half the customer’s electric bill would pay for the actual electricity. The other half of the revenue was earmarked for overhead, including salaries and equipment for the light plant and line crew. This is a basic industry standard, with most power providers maintaining a 50/50 split between their cost of electricity and overhead to provide the necessary services.
The rate also established a surcharge to be added to a customer’s bill monthly. That surcharge is the difference between the base rate established for the cost of electricity back in 2001 ($0.0437) and the average of the previous three month’s actual energy cost. In April 2006, the City of Memphis paid an average of $0.0823 per kWh for its wholesale power. In May that rate was $0.0909 and in June it dropped back to $0.0817 per kWh.
The costs from the three months are averaged, dividing the total price paid for the power by the total number of kWh used in the city (minus the electricity consumed by the city itself to power the light and water plants, the cemetery, the swimming pool, city hall, the police department and fire station, street lights and various other public holdings). That produces the base energy cost, which in June was $0.0881.
So in July 2006 customers not only were paying the normal $0.0877 per kWh, they had the added surcharge of $0.0444 per kWh. The city paid an average of $0.0881 per kWh for power sold to customers, creating the surcharge ($0.0881 – base rate $0.0437 = $0.0444 per kWh surcharge).
It is a confusing process that prompted one citizen in attendance at the meeting to tell the council it has done a very poor job of communicating the problem with its customers. Discussion on the bill increases stalled when prospective solutions were discussed, as most were in agreement there is no quick fix to the issue. One resident questioned why the city does not generate its own power.
Light Plant Superintendent Mike Ahland explained that the plant’s generators are not nearly as efficient as those more modern facilities at larger plants. He said, while the city has the capacity to produce electricity in emergency situations or during high peak demands, it is not cost efficient to generate on a regular basis. He estimated it would double the current cost of electricity if the city used its diesel-fueled generators to meet the entire demand. However Ahland noted that by simply maintaining the capacity to generate, the city receives a demand credit of more than $10,000 a month from the electricity provider.
Since 1996 that provider has been the Missouri Public Energy Pool (MoPEP), a cooperative consisting of 26 Missouri cities joined together under the Missouri Joint Municipal Electric Utility Commission (MJMEUC), a state-wide Joint Action Agency specifically authorized by state law to operate as an electric utility for the benefit of the combined requirements of the members. Established by six charter members, the MJMEUC has grown to a membership of 56 consumer-owned systems ranging in size from 700 to 87,000 meters. These municipal and cooperative electric systems serve 347,000 retail customers, and have a combined peak load of over 2100 MW.
MJMEUC may construct, operate and maintain jointly owned generation and transmission facilities for the benefit of members. The Commission has the authority to enter into contracts for power supply, transmission service, and other services necessary for the operation of an electric utility. MoPEP, which is run by the MJMEUC, consists of the cities of Albany, Bethany, Butler, Chillicothe, El Dorado Springs, Farmington, Fayette, Fredericktown, Gallatin, Harrisonville, Hermann, Lamar, LaPlata, Macon, Monroe City, Odessa, Owensville, Palmyra, Rock Port, Rolla, Shelbina, Stanberry, Trenton, Unionville and Vandalia.
In 1991, when Memphis joined MoPEP, the city council authorized the contract with the new entity based on electric rates well below the wholesale power contracts being offered by area electric cooperatives. One director of an area cooperative indicated that the city took what was an excellent deal at that time, saving customers on their electric rates. Now, since rates through MoPEP have risen, the city is faced with some difficult obstacles in finding a solution. The most difficult mountain to climb is the MoPEP contract itself, which requires a member to give five years notice before leaving the power-buying group.
Even if the city did escape its MoPEP contract, there are fewer options available than back in 1996. Most of the electric cooperatives no longer offer wholesale power contracts, meaning the city has limited options to replace MoPEP, even if it legally could.
“Based on the current situation, the city has some limited options to offer relief to our electric customers,” stated Alderman Feeney. “We can cut our costs, which means likely cutting some services or other expenses. We could also possibly lower rates by using the city’s reserve funds earmarked for system improvements and repairs. Or, we can attempt to change suppliers, but our contract and the existing options will make that extremely difficult. None of these are perfect solutions.”
Mayor Roger Gosney asked the citizens to consider making efforts to conserve electricity to help lower their expenses while the city strives to resolve the problem.
“Trust me, we are working on this issue, but it doesn’t appear as there is a quick fix,” he stated. “We cannot promise you anything, except that we are going to try to help. Remember we are all customers too.”

September 14, 2006
Budget Woes Force City To Make Cuts
Faced with several difficult budget decisions, the Memphis City Council entered the 2007-08 fiscal year at the September 7th public meeting with announcements of numerous cuts.
The escalating electric rates focused much of the council’s attention on the city light department. Faced with the prospects of a deficit budget in the department, the council made significant financial cuts including the elimination of one position on the city’s line crew. A position at the city light plant was also eliminated, with that employee being transferred to the street department.
The budget woes forced the city to eliminate the position of animal control officer, which had also performed office duties at the light plant and the police department.
Combined with other cost-saving moves, the city trimmed more than $100,000 from the nearly $1.9 million budget for the electric plant.
The council also lowered the transfer rate for electric revenue into the general fund from five percent to three percent. An estimated $60,000 of the city’s $1.9 million electric revenues will be transferred into the general fund, which pays for the operation of city hall as well as the police department. This transfer is made in lieu of the utility franchise fee that is typically received by municipalities from the service providers. The next step is to make the cost-cutting moves translate into lower electric rates for city residents.
The council scheduled a special meeting Thursday, September 14 at 5:30 p.m. to review electric rates. The city has contacted the Missouri Public Energy Pool (MoPEP) asking that a representative of the city’s power provider be present for the meeting. Mayor Roger Gosney indicated this would be the first of a series of meetings to review the electric situation in an effort to address rising costs.
In another cost-saving measure the city amended its policy for the superintendents’ vehicles. Under current policy the superintendents were required to drive their department truck to and from work. Alderman Brush presented figures that indicated that this policy, on just the two vehicles operated by the superintendents that do not reside within city limits, was costing the city approximately $1,500 to $2,000 a year in fuel alone.
The council voted 4-0 to repeal the policy and mandated that superintendent’s vehicles would be parked at the department headquarters when the operators were not on duty.

September 21, 2006
MoPEP Rep Offers Little Immediate Relief For High Electricity Rates