The Board of Water, Electric and Communications Utility Trustees had a full agenda at the Tuesday, March 28 meeting. The Trustees discussed and approved agenda items including Muscatine Power and Water’s (MPW) Powering the Future strategy; Phase 2 of the Utility’s internet restructure plan; and electric, water and TV rate adjustments.
After review of the Utility’s 2022 power supply study, customer feedback received, and thousands of hours of staff study and analysis over the past several years, General Manager Gage Huston and Doug White, director of power production and supply, presented the Trustees with several recommendations for the Utility’s future in power generation.
In addition to the scenarios presented at the Customer Forum, March 6, 2023, staff included recommendations to continue with energy demand response alternatives and energy efficiency services.
“As reflected in customer comments we’ve received,” shared Huston, the best path forward for customers is one that maintains MPW’s award winning reliability, assures MPW’s rates continue to be affordable, provides the flexibility during a time when the electric industry is in a rapid state of change, and furthers MPW’s sustainability initiatives.”
While no specific Board action was required
by state code or MPW’s Expenditure Authorization Policy, Staff requested a vote from the Trustees to solidify direction for the next steps in the Utility’s Powering the Future initiative.
We are asking the Trustees’ to solidify the direction of the next steps in our Powering the Future initiative,” said Huston. “Assumptions, forecasts and plans will continue to be evaluated, but confirming the Trustees’ direction at this time will provide focus for staff’s efforts for the next few years.”
A summary of the recommendations follows:
- Pursue development of small-scale combined heat and power (CHP) unit,
- Pursue additional renewable resources,
- Pursue Unit 9 effluent limit guidelines compliance (new standards for wastewater discharge to surface waters),
- Continue to elevate power supply options,
- Continue energy efficiency services, and
- Continue to investigate demand response alternatives.
Despite the significant planned changes in MPW’s power generation portfolio, Huston emphasized, “The most important message is MPW local generation is here to stay. While the makeup of our power supply is changing, we will continue to honor the commitment made to the citizens of Muscatine 100 years ago to provide reliable, low-cost electricity to our great community.”
Community members are encouraged to visit www.mpw.org/powering-the-future to learn more about the Utility’s plans and submit questions.
Addressing evolving internet usage, Erika Cox, director of customer and technology experience, provided information about Phase 2 of MPW’s internet package restructuring plan. “Customer internet usage and preferences continue to evolve,” shared Cox. “The number of devices connected to home networks keeps increasing – straining individual internet connections – which can create a less-than desirable customer experience. This restructure addresses that.”
Phase 2 of MPW’s internet restructure plan aligns with industry best practices while optimizing the customer experience. Beginning in May, the new service-level structure will bring down the price of the highest internet speed and “next level” customers to higher speed packages at no additional cost. Cox added “Our goal was to get our 1 Gbps package, the highest bandwidth offering, below $100, making it more affordable and accessible to customers. With today’s changes, we’ll now be offering that 1 Gbps package for well under that $100 price point.”
Cox explained fewer customers have been opting for lower speeds and more are calling to upgrade to higher bandwidth packages when they notice buffering and slow downloads because their current internet package is maxed out due to the ever-increasing bandwidth needs inside their homes.
State and federal authorities now consider 100 Mbps to be the new minimum standard for household broadband connectivity. “100 Mbps will become our entry product. This change is in alignment with national trends and Governor Reynolds’ vision of every Iowan having access to high-speed internet. Other than launching even higher bandwidth packages in the future, Phase 2 changes should be the final restructuring for internet for several years,” concluded Cox.
The Board approved rate adjustments for electric, water and TV services to maintain the long-term financial stability of the Utilities and support ongoing investments to ensure reliability of infrastructure.
- Electric – an overall 1.3% base rate adjustment effective July 1, 2023 and July 1, 2024. An average home using 850 kWh per month will see an approximate $1.02 increase to the monthly bill this year.
- Water – an overall 8% rate adjustment effective July 1, 2023 and 4% rate adjustment effective July 1, 2024. The Water Utility has been greatly impacted by inflation, with concrete costs increasing and chemical costs roughly doubling. An average home using 3,815 gallons per month (5.1 CCF) will see an approximate $1.67 increase to the monthly bill this year.
- TV – an overall 6% rate adjustment effective May 1, 2023. The principal reason for video rate adjustments is the continuing escalation in costs to acquire programming content. A Basic and Select subscriber will see an approximate $3.14 and $6.74 monthly increase, respectively.
Base rate adjustments for the electric and water utilities are based on recommendations from electric and water cost-of-service and rate design studies conducted by Dave Berg Consulting, LLC. Per Board policy, all electric and water base rate adjustments are made based on a cost-of-service analysis, which ensures that different classes of customer are paying the appropriate rates based on the costs to service each customer class.
General Manager, Gage Huston commented “We recognize the recommended price adjustments impact our customers, which is why the timing for the adjustments are staggered. Even with the rate adjustments, MPW’s electric and water rates remain competitive and below state and national averages. The overall cost of MPW’s TV offering continues to stay in line with direct satellite competition, as well as regional benchmarks.”
“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,” concluded Huston.
MPW financial results were negatively affected by low wholesale market prices as natural gas prices have sharply fallen since 2022. MPW had an $88,000 net loss (negative change in net position) for the month, which was $1,815,000 below what was budgeted. While the Water and Communications utilities had positive net income, the Electric utility loss was significant, falling $1,948,000 below budget for the month. The low wholesale prices and some plant outages in the last six months will result in a $0.00292 per kWh Energy Adjustment Clause (EAC) recovery in April 2023 from all billed customers. Mark Roberts, director of finance and administrative services, explained to the Trustees, “the EAC was reimplemented in 2022 and had very limited impact on customers’ bills since reimplementation; however, unusual events for the six months ending February 28 have resulted in a higher EAC charge in April.” He went on to note “MPW staff will continue to evaluate the EAC structure in light of changed market conditions.”
In other action, the Board:
- Set May 2, 2023, for receipt of bids and May 30, 2023, for a public hearing for the West Hill Pump Station – Exterior Improvements Project.
- Approved the recommendation requesting the Mayor and Muscatine City Council designate May 7-13, 2023, as Drinking Water Week.