Houston is among several south-central Missouri communities who will change suppliers of electricity.

An electrical engineering consulting firm has recommended that the City of Houston begin phasing in an increase in electrical costs to customers.

Members of the city’s utility committee held a conference call Monday night with the firm.

Houston, which is among communities phasing in to a new wholesaler, will likely increase rates by about 12 percent over the next two years.

The first rate increase will be reflected on bills beginning as early as April or May, officials said. Customers have not seen an increase in more than two years except passing on cost-of-living increases, City of Houston Administrator Larry Sutton said.

The City of Houston selected the Missouri Joint Municipal Electric Utility Commission as its new wholesale electric supplier last year. The organization will supply power under a five-year contract finalized as part of an agreement with 12 municipalities.

The utility commission was organized by 69 municipalities in Missouri to aggregate power purchases and it won out over three higher bids to become Houston’s new electric wholesale supplier. The city will continue to provide electricity at retail service to customers within the city limits.

By joining, the city was able to join other municipalities to obtain a competitive price compared to a shorter-term contract offered by Sho-Me Power Corp. of Marshfield.

The change in electric supply has been in the works for more than a year. The city’s current supplier, Sho-Me Power — a generation and transmission cooperative tied to the state’s rural electric cooperative network — notified the city and 14 other municipalities in March 2010 that it would terminate its long-term contracts with the cities in March 2013. The city’s power supply would instead be offered at a higher cost with a shorter-term contract.

In response, the impacted cities formed the Mid-Missouri Municipal Power Energy Pool, or MMMPEP, to collectively bid for electric wholesale supply and achieve greater economies of scale. MJMEUC’s bid was significantly less than the next best wholesale competitor, Ameren Missouri.

The city has received power from Sho-Me for more than 60 years. Under the proposed Sho-Me proposal, the city’s wholesale rate was expected to increase by 28.8 percent over the next three years. The consultants from MMMPEP cities indicate the MJMEUC bid was the lowest and best bid, providing a smaller increase of 17.2 percent over current rates during a three-year period and long rate stability with a five-year term.

Rates for electric consumers have increased in Missouri significantly. The state’s three investor-owned utilities have granted rate hikes from the state’s Public Service Commission over the last five years totaling about 34 percent. Rates on the cooperative systems have also risen significantly.

Sho-Me Power Corp., St. Louis-based Ameren Missouri and Westar Energy of Kansas all competed to provide power.

BMHG Engineers provided the energy consultant work for the MMMPEP group.

Leave a comment

Leave a Reply