At Muscatine Power and Water’s (MPW) October meeting, the Board of Trustees was presented with the Utility’s 2025 Operating Budgets and 10-Year Financial Projections (2025-2034). The budget and projections highlight the Utility’s continued investments in essential infrastructure for enhanced safety, customer service, reliability, affordability, flexibility, and sustainability.
The table below illustrates a high-level overview of the proposed 2025 budget numbers for each utility and MPW in total.
Key projects in the upcoming Electric Utility budget year include the combined heat and power (CHP) unit, continued work on the Grandview Substation and upgrades of the electrical grid to minimize outages and further improve response times. For the Water Utility, system enhancements will be made for safety and quality, and the Communications Utility will continue to expand high-speed internet access to underserved areas. The budget also outlines sustainable initiatives, such as continuing development of the Muscatine Solar 1 project and working toward completion of the CHP unit that will reduce carbon emissions.
By prioritizing these projects, MPW aims to ensure dependable service while embracing long-term resilience and environmental responsibility to meet evolving community and customer needs. Projects include:
Electric Utility
- CHP Unit — The project has been planned and approved with procurement underway. While this project does not have a significant, direct impact on rates over the next ten years, it will require a large capital investment, a large debt issuance and considerable time for MPW staff to develop.
- Grandview Substation — $5.7 million is included to replace aging components and improve substation flexibility to prepare for the Muscatine Solar 1 interconnection. The rebuilt substation will enhance reliability and provide capacity for future load growth.
- System-Wide Sectionalization — $0.8 million is planned to minimize outages, a project that is supported by grant funds.
- Overhead-to-Underground Conversions and Fault indicators — Moving overhead electrical lines underground in targeted areas to minimize outages and installing additional smart fault indicators to enhance reliability ($0.8 million). Grant money is also available to support these projects.
Water Utility
- Lead Water Service Lines Replacements — $8.6 million has been planned over multiple years for the replacement of lead service lines at customer premises. This project is partially supported by Federal funding.
- East Hill Reservoir — A $1.7 million project to refurbish the reservoir in 2025.
Communications Utility
- Notice of Funding Availability (NOFA) 6 and NOFA 7 broadband expansion — The NOFA 6 fiber expansion project is expected to be completed by the end of 2024, with grant reimbursements from the State of Iowa to be received in 2025. MPW’s NOFA 7 fiber expansion project is planned for completion in 2025.
- NOFA 9 broadband expansion — Communications utility staff awaits the announcement and terms of NOFA 9 from the State to determine if another fiber expansion project will be pursued.
- Debt repayments from financing MPW’s original Fiber To The Home project are being accelerated and expected to be fully paid off by the end of 2027.
The 10-Year Financial Projection provided the Trustee’s a comprehensive plan of major projects and enhanced service offerings for Muscatine community residents in the coming years. A combination of large utility projects, inflation, and regulatory compliances costs have impacted financial projections – resulting in an indicated need for higher increases in electricity rates for 2025 and future years.
“Although MPW has been successful in keeping electric rates base rate increases modest over the last several years, variables beyond our control are making it more difficult to forecast rates,” shared General Manager, Gage Huston. “While current projections are indicating a higher percentage increase in 2025 and beyond, staff continues to evaluate market drivers and utility investments decisions to ensure we’re keeping our rates below State and national averages.” MPW will be undertaking updated cost-of-service and rate design studies this winter to determine 2025-2026 electric and water rate adjustments.
Huston continued, “Our team understands the high cost of living is weighing heavily on families, where utility bills are often one of the largest monthly expenses after housing,” said Huston. “As MPW plans for the coming year, we’re committed to keeping rates as manageable as possible while still making essential investments to ensure reliable service. We know families are tightening their budgets, and we want to do everything we can to provide the dependable, affordable services on which our community relies.”
For the month, MPW net income of $178,000 was $124,000 better than budget; net income variances for each utility were relatively small. Through the first three quarters of 2024, all three utilities are performing better than budget, with the net income total of $3.5 million being $6.2 million better than the budgeted loss.
In other business, the Board:
- Approved payment of September 2024 expenditures and transactions totaling $8,813,349.34.
- Set a public hearing for Tuesday, November 26, 2024 at 3:58pm to received comments on MPW’s 2025 Operating Budgets.
- Received an update from MPW staff about third quarter progress implementing the Utility’s 2024-2026 Strategic Plan and Key Performance Indicators for that period.