$1.7 million saved in first year alone.
Significant savings have resulted from the Hannibal Board of Public Works (HBPW) adoption of a self-managed energy plan a little more than a year ago.
HBPW General Manager Heath Hall said that in fiscal year 2017-18, the board spent $1.7 million less to purchase power than in fiscal year 2016-17.
"The quantity of kilowatt-hours purchased during the two fiscal years was very similar, so the savings can be attributed to the self-managed method of purchasing power," he said.
The switch from a full services purchase power contracting approach to a self-managed method of purchasing power did not happen overnight. Hall recalls Don Willis, a former HBPW general manager, discussing the benefits of a self-managed plan a decade ago. When Bob Stevenson, the recently retired HBPW general manager, came to Hannibal in 2009, he also suggested a self-management plan might be a cheaper approach.
"I appreciate the foresight that both men had and that we are now reaping the benefits (of a self-managed energy plan)," Hall said.
According to HBPW Finance Director Abe Gray, the energy savings were not surprising. "Power supply costs for the fiscal year ending June 30, 2018, were very close to our budget, so the results were about what we anticipated," he said.
Hall does not foresee the amount of savings continuing to grow. "Unless the 'day-ahead' or 'real-time' market for electricity changes, we do not anticipate significant changes in our savings," he said.
Ratepayers have also benefited from the open market energy purchasing.
"The approximate 2 percent decrease in residential electric rates that occurred in July 2017 probably would not have occurred without the expected savings from the self-managed plan," Hall said. "The savings we are seeing have made it possible to hold rates steady and for us to continue to get closer to our cash reserve target amounts."
Hall said maintaining adequate cash reserves saves HBPW customers money, because it means less has to be borrowed for capital projects. It also gives the HBPW the ability to pay for emergency expenses that insurance doesn't cover.
Gray credits consultants, GDS Associates, Inc., of Marietta, Georgia, with enabling the HBPW's "energy portfolio to function very smoothly and not require significantly more staff time than the previous (full services purchase power) arrangement."
Hall said there's still plenty to learn about managing an energy portfolio.
"We will continue to seek advice from experienced people in this arena," he said. "So far, we have benefited from the expertise and experience of our consultants. They help us navigate the changes in the marketplace, obtain energy sources and secure contracts that will hedge our exposure to potential swings in the market."