Residential electric bill payers in the city of Hannibal will be in for a bit of a "shock" if a proposed rate cut is left in the Board of Public Works’ (HBPW) 2017-18 budget. The financial plan will be up for consideration when the BPW Board meets at 3 p.m. Tuesday, April 18, at the BPW Conference Center, 3 Industrial Loop Dr.
While electric rates will decline by approximately 2 percent, water and sewer rates will be going up slightly for all classes of customers.
According to Abraham Gray, HBPW finance director, the end result of the rate changes won’t have a negative impact on consumers.
"It won’t be exact to the penny, but it will have an approximately zero net effect to the average residential customer," he said.
The electric rate reduction will not be across the board.
"The electric rate cut would be for residential only," said Bob Stevenson, general manager of the HBPW. "Two years ago we did a rate cut for the commercial and industrial customers."
While in recent years rate increases in water and sewer have been driven by the need to make loan or bond payments for system improvements or repairs, such is not the case this year.
"It’s all about labor and chemicals," said Stevenson. "That is what the cost increases are about.
"The sewer is getting hit with some pretty high capital (expenses) this year that we think is imprudent to try to avoid."
Councilman Mike Dobson, a spectator at the BPW Board’s March 21 meeting when the proposed budget was presented, applauded efforts to hold the line regarding rates.
"I’m glad to hear rates will be flat this year," he said.
According to Gray, the HBPW’s net income in the fiscal year ahead is expected to jump to approximately $5.6 million, compared to a budgeted Fiscal Year 2016-17 net income of close to $2.7 million.
"The vast majority of this increase in budgeted net income is due to the decision to pursue a self‐managed power supply portfolio, which is expected to save approximately $2.5 million in Fiscal Year 2018, based on the best available data we have," he said.
The proposed budget received solid reviews.
"Overall, we feel that this budget reflects realistic and attainable results for our business, makes necessary capital additions and improvements, continues to build our cash reserves toward their targets, and adequately services our debt obligations," said Gray.
"It looks workable to me," added Stevenson. "This would be a starting point. It meets all our targets. (There will be) positive cash flow into every fund."
While the budget will come up for approval this month, rate changes won’t officially be submitted for approval until the May meeting. A special rate hearing will take place in June before the new rates are scheduled to take effect at the start of the new fiscal year – July 1.
Reach reporter Danny Henley at firstname.lastname@example.org