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Rate Hike? CWLP Finances in Trouble, Aldermen Want Options

Updated: Thursday, August 21 2014, 05:09 PM CDT
SPRINGFIELD -- Do you need to prepare your pocketbooks?

City Water Light and Power Chief Engineer Eric Hobbie presented a gloomy financial forecast Tuesday night at city council, warning of a potential need for another power rate hike.

"If we have to borrow $15 million, whatever.... it would likely mean a rate increase," Hobbie told the council. "But if we close those plants down, and have to buy power on the market, those prices are going up, and it's going to be an indirect rate increase. It's coming to the consumer one way or the other."

The $15 million he's referring to is the rough cost to upgrade some CWLP power plants to comply with EPA regulations "on the near horizon."

The struggling utility would have to borrow the money. Since Hobbie says CWLP is on track to another technical default this year, and thus another drop in bond rating, that could be an expensive proposition.

The bottom line is, CWLP would need money for the project, and it might be money from a rate increase. But the utility doesn't have the power to increase the rates on it's own. The city council does.

"Unless you know something I don't know. I don't believe there would be any support on the city council to raise rates," said Mayor Mike Houston.

But what other solutions are there? At city council, aldermen asked for options.

Ward 1 Alderman Frank Edwards say it's important to consider all of them, whether its possibly closing the plants, or finding other ways to pay for the upgrades: like stopping the CWLP's PILOT payments - the utility's "payment in lieu of taxes" to the city.

"How fair is it to the rate payers that they're paying electricity, and it's ending up in the corporate fund?" Edwards asked.

City Budget Director Bill McCarty doesn't like that idea so much.

"All you're doing is the proverbial robbing Peter to pay Paul," he said.

The PILOT payments bring in $7 million to city coffers every year. To fill that hole, McCarty said, everything would have to be on the table.

City staff even did an exercise to find out. The final butcher's bill? In the neighborhood of 80 to 100 support positions.

Mayor Houston says the city is also trying to get some state grants for coal fire plants

"We have been able to get funds previously, we are hoping to be able to be able to get funds in the future," he said.

Newschannel At Nine asked if that meant a rate hike would be off the table.

"There's never a complete removal of anything," he responded. "All options are certainly something that have to remain on the table."Rate Hike? CWLP Finances in Trouble, Aldermen Want Options

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