The Muscatine Power and Water (MPW) Board of Trustees was presented with the Utility’s 2024 Operating Budgets and 10-Year Financial Projections (2024-2033) at October’s monthly meeting.
The budgets for the Electric, Water and Communications Utilities reflect operating expenses and capital
costs increasing for all utilities due to current economic and market conditions, large maintenance projects and large capital expenditure projects.
The table below shows a high-level view of proposed 2024 budget numbers for each Utility and MPW in total.
The 2024 Operating Budget includes the following Utility projects:
- Generation Environmental Projects
- Compliance with the Effluent Limitation Guidelines environmental regulations, a national environmental regulatory standard – $1.1M for the first year of a multiyear project.
- A planned $220K project for cooling water intake modifications; also the first year of a multiyear project.
- A $144K project for a coal additive system for mercury control.
- Grandview Substation Rebuild – the Muscatine Solar 1 interconnection will require upgrades to the substation. The rebuilt substation will also enhance reliability and provide capacity for future load growth – $948K.
- Well 27 – redrill the well to gain water production improvements – $481K.
- West Hill Sewer Separation Project (Phases 6A & 6B) – water infrastructure replacements in conjunction with the City’s sewer separation project – $258K.
- Sheridan St. Water Main Replacement – $241K.
- Fire hydrant replacements – $150K.
- NOFA Fiber Expansion Projects ($1,895K in total)
- NOFA 6 – completion of a fiber-expansion project primarily along Hwy 22 east of the City, a project partially funded by a State of Iowa grant – $195K MPW cost in 2024.
- NOFA 7 – construction and material costs for fiber expansion in the N. Mulberry/Bayfield Rd. area, a project partially funded by grants from the State/Federal and Muscatine County – $1.0M MPW cost in 2024.
- NOFA 8 – the newest proposed fiber-expansion project south and west of MPW’s current service area that is awaiting response from a grant application – $700K cost in 2024.
- Internet Core Infrastructure Upgrade – continuing investments in the Utility’s 10-Gig network – $153K.
The 10-Year Financial Projection was also provided for Trustees’ review. Each year, Utility staff compiles a comprehensive plan of major infrastructure projects and enhanced service for Muscatine community residents in the coming years.
A combination of large utility projects, inflation, wholesale electricity market changes and regulatory compliance costs have affected financial projections – likely resulting in higher increases to electricity rates for 2025 and beyond.
“Although MPW has been successful at keeping electric base rate increases modest over the last several years,” shared Gage Huston, general manager, “variables beyond our control are making it more difficult to forecast rates. While current projections are indicating a higher percentage increase in 2025 and beyond, staff will continue to evaluate market drivers and utility investment decisions to ensure we’re keeping our rates below state and national averages.”
In March, the Trustee’s approved a 1.3% base rate increase, scheduled to be implemented in July 2024.
Huston continued, “We understand families are trying to stretch dollars – MPW is doing the same. We will continue to be diligent in our efforts to keep costs as low as possible while providing quality service for the community.”
The Board heard a summary of financial results for September. MPW’s loss for the month was $485K, which was $212K below budget. The Electric Utility $246K loss drove this unfavorability. Mark Roberts, director of finance & administration, noted after 15 months of strong capacity sales prices (the market value of having generation resources available to provide power and energy to the Midcontinent Independent System Operator market), market capacity prices everted to levels before those increases. The net effect of lower capacity prices was $258k unfavorable to budget in September.
In other business, the Board:
- Approved payment of September 2023 expenditures and transactions.
- Approved Final Acceptance for Unit 9 FGD Upper Roof Overlay Project.
- Approved the adoption of the new Public Utilities Regulatory Policies Act (PURPA) Standards from the 2021 Infrastructure Investment and Jobs Act for (1) Promotion and Demand-Response & Demand-Flexibility, and (2) Promotion of Greater Electrification of the Transportation Sector.
- Heard an update from MPW staff about third quarter progress implementing the Utility’s 2021-23 Strategic Plan and Key Performance Indicators for that period. An updated strategic plan will be in place for the 2024-26 period.