Tag Archives: City Council

05.01.26
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More Transparency Needed On Utility Rates

The City Council is starting to consider rate increases for water and sewer and solid waste services.  The Water and Light Advisory Board has already recommended a 10% increase in water rates for fiscal year 2027.  How do we know that those increases are actually needed? Or if they are fair?

Transparency, equity, and accountability have been key themes on this blog since the development of the 2016 “Are We An Us?” dialogue guide in 2016. Ensuring these values are reflected in CIty governance requires citizens to be vigilant and to ask hard questions as the City Council makes decisions that affect us all.

We talked with Jim Windsor, the retired Assistant Director for Utilities for the City of Columbia, about what questions citizens should be asking to ensure that rate increases are actually needed, and that rates are fairly set.

CC: Welcome Jim. I know people are concerned about rate increases, especially as costs continue to rise in many areas. What should we be asking to ensure that any rate increases are actually necessary and that rates are set fairly?

JW:  There are two issues that I have raised with the Council that utility customers could be asking questions about. These relate to intragovernmental fees and transfers that are not being adequately reviewed, and the costs of annexing the water plant which, it turns out, are much higher than represented at the time the decision to annex was made.

CC: Let’s take those separately. Tell us more about the intragovernmental transfers. 

Intragovernmental Transfers

JW: Utility customers are paying for millions of general fund expenses through intragovernmental fees and transfers.  These costs get little scrutiny, yet they lead to  increased utility rates.  

These intragovernmental charges for general fund expenses are in addition to the  “PILOT” (payment in lieu of taxes) charge that the water and electric utilities already pay to the general fund.  Several of these charges are questionable. 

For example, portions of the Deputy City Manager salary is assigned to the utilities even though that position does not supervise or manage utilities. Utilities also heavily fund charges like Building Utility Charges, Building Maintenance, Public Communications and Janitorial Services. Water & Light currently pays about 30% of the General Administrative Fee and the Public Communication Fee. In total, utilities pay 70% of those fees.  Some departments, like the fire and police departments, pay nothing.

When setting rates, these charges are then counted as “administrative costs” of the utilities and then are loaded onto base rates.  The base rate is the minimum amount a customer pays before even using any service like water, electricity, or sewer. I calculated the minimum base charges paid by  a residential customer for the five city utilities.  The range is $67.65 to $112.41 with the difference being the size of water meters and size of roll-carts. Because of these additional intragovernmental charges, our rates are higher than they need to be.

It is very hard to review these costs. The amount and type of such transfers are not broken down for the City Council when it is asked to raise rates and so there is little review. Nor do citizens have much of an opportunity to question these costs. That lack of transparency invites a practice of using the utilities as a “cash cow” to fund government activities without transparency or accountability for the growth of costs. 

CC: What changes would you propose?

JW: First, we need real transparency on these charges and then a fair methodology for assessing charges to all departments, not just loading them on the utilities.

Second, I would suggest that these government administrative costs should be recovered through taxes which would more fairly distribute costs among the city residents that benefit from city services. This alone would result in lower utility rates. 

Of course it is easier just to fold these costs into utility rates rather than to pass a tax increase. Yet when we load them onto rates we create an inequity in that a significant amount of the “city growth” is in areas served by Boone Electric and water district services, rather than city utilities.  The utilities that serve those areas do not pay these fees. Yet their customers are benefiting from city services and not paying their fair share of administrative costs for the services they receive. And customers, particularly low income customers within the city are paying more than their fair share.  So from an equity perspective we really need to discuss the difference between what “taxpayers” fund and what “ratepayers” fund. 

The City Council is currently considering a sales tax increase and can address these issues, and correct needed allocations both among funds and between taxes and rates as it does so. 

Annexation

CC: Can you summarize for us the issue of annexation of the water plant?

JW: When the City Council was persuaded to annex the water plant in 2019,  it was assured there would be “no fiscal impact.”  There has in fact been a significant fiscal impact. I have explained elsewhere that annexation was unnecessary, and that Council can and should mitigate the impact of the annexation on water rates.

CC: How can Council mitigate this impact?

JW: This gets a bit technical so stay with me.  As I noted earlier, the water and electric utilities pay a “PILOT” charge to the general fund. This charge is a combination of a gross receipts tax (that appears on your bill) and a property tax (that is paid from utility rates). The water utility is being charged the combined property tax rates for all Boone County taxing entities (not just the city rate). Since water utilities have a significant amount of infrastructure compared to the revenues they bring in, this way of charging the PILOT represents a significant drain on the water utility’s financial resources. The annexation has increased the property tax for the water utility by over $300,000 per year

This way of charging the PILOT is also inequitable in the way costs are distributed among the utility companies. The water utility currently is paying more property tax PILOT than the electric utility and is five times smaller. Sewer and solid waste don’t pay a PILOT.  With the completion of the almost $40 million improvements to the water plant, the water utility will in the future be charged an additional $800,000 to $900,000 per year if no change is made.  That cost will then be passed on to water utility customers through their rates if the Council does not act.

Although the annexation was presented as having “no fiscal impact”, it appears to have been designed to increase city revenues without the scrutiny that either a rate or tax increase would require.  While the annexation cannot be undone, the Council could, and should, mitigate the effects of this error. It can do so by setting the property tax rate for the water plant at only the Columbia rate. Since the revenues raised by the water PILOT are not shared with other taxing entities, it makes no sense for the taxes of those entities to be included in the calculation (other than to artificially extract more revenue). Both Ameren and Boone Electric pay a PILOT based only on the city rate.  Limiting the PILOT to the city tax rate would eliminate most of that $800,000 to $900,000 increase, which would otherwise occur later this year.  

CC:  So what might a concerned citizen do?

JW:   If we are serious about the affordability of utility rates, fair rates, and governmental accountability, we will ask for full transparency on this issue. Contact your Council member, share this post, and ask that these charges be reported and reviewed before any changes in rates are made. You can also share this information with your neighbors and ask that they do the same.

CC:  Thank you Jim for sharing your knowledge and helping us unpack this.

07.02.20
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Vision Lights On! New Report Confirms Perche Creek Risk

Again we have been lucky to have a cool Spring. As hot weather arrives, though, it’s time for another reminder that our Council unnecessarily placed our electric service at risk when it voted to “pause” the transmission line planned for the Southwest, with no alternate plan in place.

Now yet another consultant has confirmed that yes, the Perche Creek substation is overloaded. In a presentation sent to the Integrated Electric Resource and Management Plan Task Force, the engineering firm assisting the task force (Siemens) confirms that the substation has exceeded its firm capacity (in fact is currently operating at 150% of firm capacity at peak temperatures) and that its associated feeders are overextended.

As we have pointed out before, this puts us at risk for serious outages. A failure at Perche Creek would affect everyone in Columbia. Note that both the McBaine Water Treatment Plant and the Gillespie Bridge Sewer Treatment Plant are served by the Perche Creek substation. Due to the failure to build the transmission line, these facilities are not backed up the way Water & Light had planned or would like to them to be.

The pandemic has given us ample illustration of the fact that when those in leadership positions ignore or deny latent but serious risks, the potential harm to citizens increases. When the line was paused it was on-time, on-budget, and fully funded. During the last five years, we have paid millions in increased rates (which were approved but not “paused” by the Council) without getting the promised return.

It is unlikely that at this point we will be able to fix our electric infrastructure without paying out millions more. We should, however, be able to get a full accounting of what the Council’s “pause” has cost us, put in the infrastructure needed to ensure the reliability of key services, and adopt procedures to ensure that the Council cannot in the future so easily and heedlessly derail key projects that the public has already approved and paid for.

09.05.18
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Transparency and Transmission: Option E Costs More

The City Council did not have an alternate plan in place to ensure electric service reliability when in January 2016 it “paused” construction of the Mill Creek substation and related transmission lines. That project, which was intended to address load growth in the South and Southwest, was known as “Option A”.  Starting in mid 2016, the Council decided to study the possibility of instead building a transmission line in north Columbia. This proposal was dubbed “Option E”. Suggestions were made that Option E was likely to be less costly than Option A.  “Option E” did not, however, address the Mill Creek substation or the substation overloading that the new substation was intended to address.

In the fall of 2017, almost a year and a half after the “pause”, the Council approved, at a combined cost of almost $200,000, two consulting contracts related to electric service. The first, a contract to look at the engineering and estimated cost of “Option E” was awarded to Burns & McDonnell.  The second, a contract to review electric service loads and electric distribution needs, was awarded to Quanta Technology. Both consultants sent their final reports to the City in July, 2018. We recently received these reports  through an open records request.

The cost estimates provided by Burns & McDonnell show Option E to be over $10,000,000 more expensive than the “paused” line, known as Option A.

The report also calls into question other arguments made by Council members who voted to pause Option A. For example, the Burns & McDonnell report confirms that the staff’s choice of metal poles for a 164 kV line was sound. (As the report states on “wood vertical monopole construction is impractical, as structure loading would exceed the capacity of an H6 wood pole” (p. 4-5); and also observes on p. 4-6: “[s]teel generally has a longer service life than wood and is not subject to rot, woodpecker damage, or other premature structure deterioration”). The report also documents the fact that Option E, like Option A, would impact residential neighborhoods (p. 7-2).  Although the report concludes that the “proposed route is feasible,” it qualified that conclusion, stating “there are a number of route obstructions which will need to be addressed and will ultimately have additional costs that would not be recognized from an unobstructed route” (p. 9-1).

Even though the Quanta report focused on overall system loads and did not look at substation level forecasts, it identifies the Perche Creek substation as needing careful monitoring during July as well as the creation of “an offloading schedule that should be triggered in case category P1 operation conditions occur (e.g. transformer failure)”. Transformers are generally manufactured for a 20 to 30 year life.  The oldest transformer at Perche Creek was manufactured in 1968, and the most recent in 1997.  The other two were manufactured in 1983 and 1986.

Another concern raised by the Quanta report is its suggestion that the City might look at changing the methodology traditionally used to ensure reliability when calculating the load serving capacity of its substations.  The purpose of  substituting a new methodology would be to “provide the opportunity to defer substation investment” (p. 29). Quanta goes on to note that selection of an alternate methodology would be dependent on “the level of risk tolerance which they [Water & Light] have regarding substation operation.”

What is our risk tolerance when it comes to electric service outages? Our homes, our businesses, and our medical facilities are entirely dependent on reliable on electricity.  The costs of an extended outage would be significant.  How close do we want to come?  The question should not be how to defer needed investments for as long as possible, but to ensure reliable service, both currently and for the long term.  As we have stated before, we need a decision-making approach that that is more proactive, transparent, and focused on ensuring our infrastructure needs are timely met in a cost-effective way.  Suggestions for how we might improve on the current process are welcome.

10.20.16
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Information and Misinformation – 1

As a community we want to make wise decisions about our infrastructure and our future.  Wise decisions require consideration of facts, needs, and consequences. On January 19 of this year, the City Council voted to  “pause”  the building of an electric transmission line and substation that had been approved by voters in 2015 and for which bonds had been issued. The Council has not announced when it will again review this “pause” nor has it talked much about how the pause is affecting economic development or our electric service.  City staff, however, recently announced that it is preparing a request to extend the moratorium on building downtown due to concerns with electric infrastructure.

We asked Connie Kaprowicz of Columbia Water & Light, who joined us in the August on-line Trib Talks forum, to help us understand some of the issues involved.

1C1C: When we look at past forums, new articles, and on-line comments, we seem to be talking about two things, the Mill Creek substation and the overall  transmission line. Can you explain why each is needed and how these inter-relate?

W& L: Electricity is generated at a power station or power plant from fossil fuels or renewable resources. Approximately 90% of Columbia’s energy comes from sources outside the city. Once the power is generated, it has to be moved to where it is going to be used. Large amounts of power are transferred with electric transmission lines. An interconnected network of transmission lines is commonly referred to as the power grid.

Transmission lines feed into substations. At substations, transformers step down the power to lower voltages. From there, power is delivered to individual electric customers by distribution lines.In the older sections of town, distribution lines are mounted on wooden poles. New distribution lines in Columbia must be placed underground according to city ordinances.

electric system diagram

1C1C: Does the Mill Creek Substation still need to be built even if the transmission line is built on a route other than Option A?

W & L: Yes, As noted above, the Mill Creek substation is needed due to the electric load growth in the southern area of town. Our other substations serving the area are loaded over the suggested amount. As we explained at our May work session presentation, electric systems must have reserved capacity for times of high loads and/or problems with the system such as those caused by storms. Both the Hinkson and Perche substations are overcapacity as shown in the chart below.

  • Substation loading goal: two transformers at 50%, three transformers at 66.6%
Year Grindstone (3*) Hinkson (3*) Perche (2*)
2007 41.5% 67.6% 61.8%
2010 44.7% 68.6% 64.4%
2015 48.6% 64.2% 72.0%

*number of transformers

1C1C: Suggestions were made in past forums and in Trib Talk that rather than building the Mill Creek substation, additions could just be made at another substation like Hinkson. You indicated in our August on-line forum that that was not a good option. Could you explain in layman terms why?

W & L: There is not room to expand the Hinkson Creek substation. Even if the University would sell us additional land, it is not the best site since it is prone to flooding. Even then we would still need to build transmission lines to get the power to where it is being used. That would involve running lines through the south side of town.

We have also already purchased the land for the Mill Creek substation which is in a better spot geographically to serve the southern side of town.

1C1C: You indicated in the August on-line forum that even if we went with the suggested alternate route for the transmission line, which has been dubbed “Option E”, additional transmission lines would still be needed on the south side of town. Can you say more about that?

W & L: Option A resolved two technical issues: One is providing a second feed into the Perche Creek substation and the other is to reduce substation loading (see info above). Option E, which was proposed by the Mayor at a council work session in May, 2016, addresses the issue of getting a second 161 kV feed to Perche substation. It does not address the need to reduce substation loading. There was no direction from the City Council on how they would like to tie the Mill Creek substation into the transmission and distribution system in the event that the transmission line route changed. So that issue would still need to be resolved.

1C1C: One of the ideas about Option E was that we might be able to place our lines on poles owned by Ameren UE and Associated Electric. What is the status there?

W & L: After the Mayor proposed Option E we first needed to do some modeling work. Modeling work evaluates any possible engineering problems that could impact the entire system so it is very time consuming. Think of it as looking at all the things that can happen during one minute of play during a team sport. There are many different possibilities and combinations of things that could present risk. After our modeling did not find any red flags, we sent our modeling work to our neighboring utilities to analyze and get back to us. We do not have a response yet from any of them. Once we do hear back from them, we could possibly do another work session with council to see if they want us to pursue Option E. We still need feedback on what to do about the Mill Creek substation.

1C1C: During our August forum at least one citizen suggested that we need not be concerned about delay in moving forward with these projects because the electric system didn’t shut down over the summer. Can you comment on that?

W & L: In our personal lives, living without electricity is hard. For businesses, it can impact their income and level of service to their customers. During the storm in 2014, the wooden 80’ tall transmission poles on Fairview snapped and it took some of the largest line trucks in the Midwest to repair them. The outage from this storm lasted for five days for some of the customers. Every situation is different when it comes to problems. Small transformers on distribution lines can be easily replaced. Damage or equipment failure at the substations could take weeks/months. That is why we plan for redundancy and reserves.

Think of a road system. When there is construction or an accident you have to detour. The electric transmission and distribution system should never be run at 100% because space is needed if we need to isolate a problem and serve customers from another line. Unlike traffic, electricity can’t get stuck in a traffic jam because overloading (heavy traffic) could cause cascading problems. This would be like what happened on the east coast in the early 2000s.

Reserves refers to having extra energy available to serve an unexpected peak. This is federally regulated as well. We have to show what our peak usage is and then secure extra energy resources beyond that. All of this a part of keeping the electric grid reliable.This summer we were close to a new electric peak but luckily it rained and a cold front moved in.

Transmission planning is complex and takes time. We first identified the need for this project in 2004 when our models indicated we would have issues with the system even under normal conditions by 2020, taking into account growth. At present, we could experience problems even before 2020, particularly if any element of the system is out of service (weather, malfunctioning equipment, etc). I personally do a lot of worrying during every storm and during periods of hot, humid weather when it doesn’t cool down much at night.

1C1C: In an earlier chat you mentioned that the  Average Electric Service Availability Index is 99.9876 for Columbia out of a hundred and that a drop in this could hurt our economic development efforts. Please expand on this. 

W & L: Our community has invested in our electric system since 1904 so it is reliable. Having a reputation of unreliable electric service is not a good thing when we seek new businesses in our community. Reliability is affected by a number of factors related production, demand from customers, and delivery. Many people don’t realize that unlike water or natural gas, electricity can’t be stored by utilities in large amounts (existing batteries for use with solar energy production are very expensive and can only store a small amount) . Electricity also does not run in one direction through a “pipe” like water or natural gas. Electrons move in different ways which is one of the things that makes electrical engineering a specialized and complex field. Businesses – particularly those that are energy intensive or, like medical facilities, that rely on equipment that is sensitive to fluctuations in power, – are concerned about both power quality (avoiding fluctuations in voltage) and availability on demand.

1C1C: Can you say more about “availability on demand”?

W & L: Because electricity can’t be stored, an electric utility has to provide the power needed at every minute of the day, even as the level of demand varies. Although the amount of electricity that the city needs over time is measured in kilowatt hours the level needed at any given time is referred to as “demand”. If everyone in Columbia, especially commercial customers with large equipment, turned on everything all at once for 2 minutes, we would have to meet that huge demand for those 2 minutes. Meeting that demand is not just a matter of producing the electricity – we have to deliver it as well. This means that our transmission and distribution systems must be robust enough to meet any spikes in demand at any given moment in time. Our ability to deliver is affected by both transmission and distribution constraints. In an ideal world, demand would be constant throughout every minute of the day. We don’t live in an ideal world, and that is why we have to build a system that can handle spikes in demand. Since large commercial customers and industrial customers demand can have a big impact on our system, they are charged a kilowatt hour charge (like residential) but they also have a separate demand charge. The following graphic will help you understand energy v.demand for our system.

1C1C:  Thank you Connie.  To our readers, continue to check this blog for more posts in this series! 

09.07.16
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The Transmission Line: Many Questions

Since the online forum on August 23rd, tax abatements have been approved for an upgrade of the Dana Light Axle Products facility, and the mayor has announced a new medical tourism initiative. Yet the issue of how we are going to meet the electric service needs of new industry or our energy intensive medical facilities remains stalled.

Our August 23 forum focused on “citizen-centered planning,” using as a case study the City Council’s decision to “pause” construction on the new transmission line while researching potential alternatives to the previously approved route (“Option A”). Citizens joining the August 23 forum raised questions about the costs of delay, the costs of potential alternatives, the costs incurred to date, the timeline for decision, and whether and how the public will be engaged in any future discussion of what is to be done.

As citizens in our past forums have observed, “People want to be informed.”  The council’s lack of discussion on a timeline, on the consequences of delay, or on the criteria for future decisions on this key issue, is not providing citizens with information they want and need.

Citizens at past forums made the following observations about how the city council approaches the issues of growth:

  • “they avoid the hard issues until those must be addressed;”
  • “They spend most of their time cleaning up messes rather than presenting clearly defined programs aimed at achieving goals;”
  • “They are always working in hindsight mode.”

We can’t meet our energy needs by talking about what “might work” or by simply hoping the whole uncomfortable issue goes away. If we are going to announce new initiatives intended to promote our economy, we should be discussing at the same time how the necessary infrastructure will be put in place to support both current and future needs. This applies not only to electric infrastructure but to sewers, water, and roads as well.

As Hank Waters said in a recent editorial:

After all these months of delay, the city council needs to get off the dime. It will never be rid of conflicting opinion on this issue. If the council has enough reason to abandon Option A, it should have the final stages of a lucid discussion and make another decision, but it will have to overcome the obvious arguments in favor of proceeding as planned.

In future posts we will further explore the issues of costs and process raised on August 23.