A Weekly Note from Mayor Gary L. Graham
“Traditional Values, Progressive Thinking”
With the dramatic increase in AmerenIP’s electricity rates last January, everyone is concerned about the cost to heat and power their homes. With summer just around the corner, even more people will be affected when the high temperatures and heat indexes require the activation of air conditioning units.
The City of O’Fallon is also concerned about the effect the electric rate increase will have on City operations. For example, we have over 7,000 street lights that cost from $12 to $21 per light per month. If the cost to power these lights goes up by 50%, the City’s AmerenIP bill will increase $50,000 per month. We will also be greatly impacted with air conditioning costs for our City facilities this summer.
It’s too early to tell what the State Legislature will do, but the City is moving forward. We are working with Cost Plus Corporation to explore the possibility of purchasing power wholesale to operate City facilities and then paying AmerenIP to deliver the power to us. This method has proven to be a big cost saver in other parts of the country, and we are optimistic that it could work for us too. We are currently in the fact-gathering stage while we wait for a final answer from the State Legislature.
Residents have asked the City if utility fee receipts will increase because of the higher electric rates. After conducting more research, we have determined there will be no increase in receipts to the City. The utility fee is a tariff that is calculated on usage per kilowatt hour and has no relation to the rate. Therefore, AmerenIP’s rate increase has no effect on our utility fee revenues because it is tied to usage and not the price.
We may actually experience a decrease in utility fee receipts. Utility fee receipts were down for both December 2006 and January 2007 when compared to the numbers from last year for those two months. You may be wondering why the receipts would be down this year from last year. Utility costs are typically weather driven and we had had a mild winter, thereby decreasing fuel consumption. We also believe that our residents may have put conservation measures in place when the rate increase was announced, thereby reducing their usage and the amount of fee paid.
Aldermen John West, Nila Grogan, Jason Boone and Phil Gardner, on behalf of the entire City Council, requested a review of utility fee receipts in light of AmerenIP’s huge rate increase. Mr. West, Chairman of the Finance and Administration Committee said, “Mayor, our audit will compare 2006 utility receipts to 2007 receipts, which will include the period of the AmerenIP rate increase.” When the audit is complete, the Council will review the City’s increased cost of providing city services, such as street lights. Based on the audit findings, the Committee will make specific recommendations to the City Council.
While we do not expect to receive more utility fee revenue, the City’s electric bill has increased just like everyone else. And just like everyone else, we will have to find money in our budget to pay for the increased costs.
The City Council and I are very concerned about the AmerenIP rate increases and are working diligently to explore viable options. I encourage residents to voice their concerns to our State Elected Officials. By working together we can make sure that officials in Springfield understand how these rate increases have severely impacted our region. The strong working relationship between City Hall and the residents we serve is yet another example of why O’Fallon is such a great community in which to live.
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