The Owensboro Utility Commission unanimously approved a reduced 2021 budget Thursday, and it’s one that marks the beginning of a new era and projects rate decreases for customers.
This will be the first budget that does not include Owensboro Municipal Utilities’ own power generation, but instead relies on purchased power to serve the City.
“The biggest reduction will be the end of wholesale shortfalls,” said Sonya Dixon, OMU manager of public relations and communications. “You will notice that wholesale power sales or power production costs are not reflected in the upcoming budget.”
This is due to the closure of the Elmer Smith Station, which will be decommissioned in about two weeks. For the first time in 10 years, the budget does not include wholesale power from that station.
Beginning June 1 — when the budget will be effective — OMU will purchase power in an agreement with Big Rivers Electric Corporation.
Dixon said the decision to close the station and enter into a more cost-effective power supply agreement and realignment of debt adds up to reduced rates for customers without compromising reliability and quality service.
“OMU was able to determine it was more cost-effective to purchase power than to operate its own plant in light of increasing environmental costs and the historically low natural gas prices,” Dixon said. “Customers will actually see a rate decrease over the upcoming years.”
There is no rate increase in the new budget. Kevin Frizzell, OMU general manager, said the business plan is designed to achieve a consolidated electric system net income of $11.4 million and a water system net income of $68,300 prior to the annual cash transfer made by OMU to the City of Owensboro.
The budget does not include potential coronavirus impact.
By the end of March, OMU saw its number of accounts in collection increase by a factor of five, to over 1,200 customers. The monthly amount in collection tripled to nearly $600,000 in early April.
Both numbers began declining in early May.
“The impacts of COVID-19 are difficult to quantify at this point, but you will notice some deferment of costs as provided by legislation related to the pandemic,” Dixon said.
