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BPU Board Adopts Electric and Water Rate Adjustments

BPU Board Adopts Electric and Water Rate Adjustments

(KANSAS CITY, Kan.) — The Board of Directors of the Kansas City Board of Public Utilities recently adopted a proposed adjustment to electric and water base rates to meet future revenue requirements for the utility, an optional “Green Rider” program allowing large commercial and industrial customers to purchase energy from Environmental Attributes (EA) to meet their renewable energy goals, and modification of the Energy Rate Component (ERC) rider allowing for additional recovery to build and maintain a new ERC reserve fund.

The modifications were necessary to maintain the integrity of the utility’s electric and water transmission, distribution, and production systems, and to meet growth needs in the community over the next five years. Passage of the adjustments followed an extensive and lengthy open public rate hearing process which included utility, subject matter expert, and public inputs on the recommended proposals by external third parties.

While increases will vary among customer groups based on costs of service and usage levels, the BPU Board has finalized a recommended 2.5% annual increase in 2023 and 2.5% in 2024, and an annual increase in water base rates of 6.0% in 2023, 6.0% in 2024 and 6% in 2025. These adjustments were based on future electric and water utility revenue requirements and cost of service reports that were completed by outside industry experts to determine rates necessary to support future water and electric operating and capital costs over the next five years.

BPU has not previously increased water rates since 2013 (a decade ago), and electric rates have not been adjusted since 2018. The utility has also taken concerted steps to control costs and streamline operations over time, without threatening service interruptions or future growth needs. This includes significant reductions to historic annual budget spending and staffing levels.

A public hearing notification process was initiated in early 2023. Based on proposed Cost-of-Service (COS) rate studies conducted by external parties, BPU staff recommended several adjustments. Two formal public hearings were held on June 14th and June 15th, 2023, providing opportunities to discuss potential rate adjustments, a new “Green Rider” to promote increased renewable energy usage, fuel cost procedures, ERC modifications, and needed electric and water capital improvement projects. Following this process, which was extended for additional review and consideration, the BPU Board of Directors adopted the recommended rate adjustments at its regular Board meeting on July 19, 2023.

The recent electric and water base rate adjustments, the optional new “Green Rider,” and ERC modifications were necessary for a variety of reasons, including among others:

  • BPU needs to invest more than $180 million in non-environmental capital improvements to maintain the integrity of its electric utility system.
  • The utility has not adjusted electric rates since 2018, nearly five years ago, and rates are competitive with the national average and that of surrounding utilities and their current rate proposals.
  • BPU’s water system needs more than $135 million in capital improvements to keep it running efficiently, to meet regulatory requirements, and to meet future demand levels.
  • BPU has not adjusted water rates since 2013, more than 10 years ago, while other utilities have repeatedly proposed and implemented increases.
  • Postponing electric and water rate adjustments any longer would delay capital and aging infrastructure improvements needed to support new growth in the community and may cause delays or service disruptions in certain areas.
  • Inflationary pressures on costs of outside services, materials, and labor continue to increase – with delayed improvements costing even more in the future.
  • The COS studies recommend an electric operating reserve fund of 120 days cash-on-hand to maintain financial stability. Without a strong credit rating and financial position, BPU will not be able to borrow money for capital improvements at a reasonable interest rate.

BPU remains one of the top-ranked publicly owned utilities in the nation, providing affordable and reliable energy for more than 110 years. Today it services 65,000 electric customers with two power stations, 29 substations, 16,500 transformers, 3,000 miles of electric lines, 19,000 streetlights, and 5,300 traffic signal heads. The utility’s water operations service 53,000 water customers with one Water Treatment Facility, three pump stations (72 MG a day), 1,000 miles of water lines, 6,200 fire hydrants, and 20 MG in reservoirs and tanks.

For additional information about the public hearing process and COS studies, go to www.BPU.com.

The mission of the utility and its employees is “to focus on the needs of our customers, to improve the quality of life in our community while promoting safe, reliable and sustainable utilities.” BPU’s Web site is www.BPU.com.

About BPU

BPU’s water department was originally created in 1909, and its electric utility was operational in 1912. The purpose of the utility, then and to this day, is to provide the highest quality electric and water services at the lowest possible cost. Today the publicly owned utility serves approximately 65,000 electric and 53,000 water customers, primarily in Wyandotte County, Kansas. The mission of the utility and its employees is “to focus on the needs of our customers, to improve the quality of life in our community while promoting safe, reliable and sustainable utilities.” BPU’s Web site is www.BPU.com.


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