In a City Utilities Commission work session Thursday, Owensboro Municipal Utilities officials outlined an electric rate stabilization plan, projecting average electric bills to be lower by approximately 5.8 percent over the next two years.
For average OMU customers, that means about a $2.86 monthly bill decrease in the first year and a $7.27 decrease by the second year.
“This was the culmination of a long road,” said OMU General Manager Kevin Frizzell, noting that it all began when a 2013 integrated resource plan (IRP) showed the way the municipal utility was heading was not sustainable.
That IRP ultimately revealed coal-fueled power was not the most cost effective available resource. The recommendation was to close the two-unit production facility at Elmer Smith Station. Unit one of Elmer Smith will close its doors in May 2019 and unit two in May 2020.
The municipal utility will then start buying electric power from Big Rivers Electric Corporation (BREC) along with adding a 5 percent solar component to their supply portfolio, which will come online in 2022.
OMU officials said those two factors are what enabled the utility to lower service costs to customers. Specifically, the monthly bill decrease will come from three components: paying off debts early, increasing base rates and decreasing both the energy cost adjustment (ECA) and environmental cost control adjustment (ECCA). The ECA covers the cost to produce power at Elmer Smith, including fuel, maintenance and operations and the ECCA covers costs to comply with EPA regulations, primarily associated with Elmer Smith.
Even though base rates are set to increase from the current charge of $10 for residential customers to $12.50 in June 2019 and $15 in June 2020, customers will see lower monthly OMU bills. This is because ECA and ECCA rate decreases, coming from the closing of Elmer Smith, will offset the proposed rise in the customer base rate.
During the work session, one board member addressed the $5 increase to customers over two years, expressing concern that those extra dollars hurt lower income community members.
“We worked hard so everyone would see a decrease on their bill,” Frizzell said, adding that OMU customer fixed charges are the lowest in the region, with Kenergy’s being $18.
Frizzell also said that low-income did not necessarily equate to a low user of electricity. He said low-income individuals typically do not spend money on weather-proofing or new, energy efficient appliances, which reduce electricity use.
No action was taken today regarding the electric rate stabilization plan. It will be voted upon by the Utility Commission at their March 21 meeting. If it is approved, it will then go for a first and second reading by the Owensboro City Commission on April 16 and May 7. If passed, the plan would be effective June 1.
Read Owensboro Time’s prior article, which covers background on the rate increase, an explanation of the OMU customer rate and OMU’s decision to close the Elmer Smith Station and sign an agreement with BREC.
