Springfield electricity rates may increase next year. Here's what to know
For the first time in seven years, Springfield residents may soon see higher electrical bills. City Utilities is seeking approval of a new electrical rate increase to address higher costs of operation due to inflation.
City Council heard a presentation on the rate increase as well as the entire City Utilities operational budget at its Monday night meeting. The council will vote on the increase at its next meeting on Sept. 18.
The proposed increase would include gradual steps over three years beginning April 2024. According to the presentation, the average resident would see an increase of less than $5 per month in each phase of the increase, totaling a $14.74 monthly increase after it fully takes effect in 2026.
The rate increases for 2024 is 4.8%, 4% in 2025 and 3.9% in 2026. Each of these increases would go into effect April of that year.
Currently, City Utilities has rates below state and national averages. With the projected rates throughout the next few years, City Utilities expects to continue to have some of the lowest rates in the state and country.
The last such increase was in 2015-2017. While there were plans to increase the rate sooner, they were delayed due to the impacts of COVID-19 and the revenues from sales to other utilities during Winter Storm Uri in 2021. If approved, the overall percentage increase would be smaller than that established in 2017.
During the meeting on Monday, Ron Mersch, COO of Olsson, a nationwide engineering and design firm with local offices in Springfield, spoke in favor of the increase. He said that the increase will allow City Utilities to continue providing quality service while keeping costs low enough to continue to attract new residents.
Overall City Utilities budget
According to city documents, in 2022, the council and Board of Public Utilities approved an increase in the water rate. This rate increase will go into effect in October and span three years.
City Utilities' revenues are budgeted to decrease, mostly due to the completion of collecting the costs of natural gas provided during Uri. On the other hand, disbursements are set to increase by about $1.5 million, though fuel costs are expected to be less.
"Based on current projections, we expect customers to pay 36% less than they did last winter for their natural gas fuel that appeared in their bills," Amy Derdall, Chief Financial and Supply Chain Officer for City Utilities said. "That's a very good direction for that."
More: City Utilities receives $9.3 million to ensure water supply is safe during blackouts
The largest portion of revenues, more than half of the total, comes from electric services. Most of the capital projects are also related to electricity. Many of these are recurring in nature — electric pole replacement, water main and sewer renewals, while some bigger projects focus on substation maintenance and updates.
This budget will also go before the council for approval at its Sept. 18 meeting.
Proposed raise for city manager
City Manager Jason Gage's raise was also opened up for public hearing at Monday's meeting. No questions were asked by the council, and no member of the public commented. The amended pay will go to council vote Sept. 18.
The renewal of the employment agreement establishes the fourth raise since Gage was hired in 2018 with a base salary of $220,000. The new contract would place his salary at $267,644.52. His most recent raise was approved in January 2022, which set his salary at $246,313.60.
This article originally appeared on Springfield News-Leader: Electricity rates may increase by almost $15 a month in 3 years
