The City of Salem will be billed about $1.73 million for wholesale power in February, more than six times more than it was billed for the same month a year ago, according to information obtained Friday from the Missouri Public Utility Alliance.
The jump was due to extreme cold temperatures in February across much of the country.
Salem was billed $279,000 in 2020, according to the information provided by MPUA following a request from The Salem News. MPUA also said the 2021 amount to be billed is an estimate.
The news could not have come at a worse time for the city of Salem, as it is already running three months-plus behind in utility billing and has experienced a myriad of billing issues since going to a new, computerized water and electric monitoring system in November of 2019. The system was purchased from NexGrid for $1.34 million.
So, who is going to pay the February electric bill, and when?
The Salem News published a story about the likelihood of the huge increase in electric costs in its March 16 edition, and cited information provided to customers in the cities of Cuba, Sullivan, Houston and Waynesville, who along with Salem are members of a 13-city group named Mid-Missouri Municipal Power Energy Pool (MMMPEP) that purchases power collectively. Some of those assessments and information to the public occurred in early March and appeared in area newspapers, prompting The Salem News to seek answers from the city of Salem as to what will happen in Salem.
Salem Director of Public Works Mark Nash when contacted by The Salem News March 15 said MMMPEP had not delivered the rate assessment to the City of Salem.
“Each city will be looked at individually,” he said. “They haven’t indicated to us how that charge will affect the City of Salem.”
That afternoon, though, city administrator Ray Walden issued a press release, including that in fact, during the freezing temperatures of February “the electrical utility grid power pool the city is part of was impacted by a series of events that created a very abrupt increase in wholesale supplier rates that were passed on to member utilities by the power pool.”
Walden wrote that the City of Salem's estimated energy bill from the power pool for February is approximately six times higher than normal. No numbers were given by Walden, and the city of Salem, unlike many neighboring municipalities, has not publicly addressed the huge electric bill since that press release, nor released any information on how that increase will be paid for. Walden wrote in the press release that “the board of aldermen is “waiting for additional information from the power group and will convene the utility committee to discuss available options.”
City of Salem ordinance 700.130 spells out plainly how the city can handle such an increase. It reads:
“A. In the event that the City of Salem's wholesale supplier(s) of electric shall implement a rate increase or decrease, that same rate of increase or decrease shall be applied to the rates set forth herein effective the same date of the rate increase or decrease from the City of Salem's wholesale supplier(s) without the necessity of a vote of the Board of Aldermen.
B. Nothing herein shall prohibit the Board of Aldermen from enacting different rates for electric services at any time nor prohibit the Board of Aldermen from effecting different rates for electric services when the City of Salem's electric wholesale supplier(s) effects increases or decreases in rates.”
In other words, without action from the board of aldermen, the rate increase will automatically be passed on to consumers. That means a $200 electric bill in 2020 could translate to a more than $1,200 electric bill in February of this year, a shocking number for customers already facing months’ worth of utility charges that have not been delivered by the city.
As of Monday, the city of Salem has not billed for utilities from Jan. 10 through March of this year.
City of Salem electric bills were not mailed at the end of March or the first few days of April, Walden confirmed to The Salem News Thursday.
The Salem News received several phone calls from city utility customers last week complaining that they had not received utility bills. As a result, The Salem News attempted to call Walden and Nash on Wednesday, but they did not immediately return the phone calls.
The Salem News did reach Walden by phone Thursday and asked when bills will be sent out and what the billing cycle will be.
"The aldermen requested a 30-day billing cycle, so that's what we will be doing," he said. "We'll be working on that next week."
But then on Monday, Walden emailed The Salem News that utility bills were mailed Monday for the period of Dec. 10, 2020 through Jan. 9, 2021. Autodrafts will be processed April 12, 2021, he wrote. The release also included that “anyone that has questions about their bill or has not received their bill by Friday, April 9, 2021 is asked to contact the utility office at (573) 729-4117.”
City of Salem utility bills received in February and early March were for service from Oct. 28 to Dec. 10, which is for 44 days instead of the normal 30 days.
Walden addressed ongoing utility billing problems during the March 15 regular meeting of the board of aldermen. The board met again Monday night, which is past The Salem News’ deadline for this week’s print edition. (For coverage of Monday’s meeting go to thesalemnewsonline.com.)
The board March 15 expressed citizen concerns about the six-week utility billing cycle of the last bill, which was not announced to the public beforehand.
“With respect to the billing cycle, I’ve gotten several comments, I know other board members have gotten comments,” said board chairman Kevin James during the March 15 meeting. “We have concerns with the way it was presented, and our perspective is that we didn’t really discuss it. It came up at utility committee meetings and that was just a suggestion of potentials.”
Walden responded with, “Okay, we followed what we understood the direction the board wanted us to go. If that’s not the case, or if you want a different billing cycle, let us know.”
James went on to address the fact that the increase happened without providing notice to the public.
“We thought, that at meetings it had been mentioned, and it was not our intention to do something that hadn’t been publicly mentioned,” said Walden. “We’re working on communications, and if we need to communicate that differently, and you want a different process, we’re glad to do that.”
Salem is not the only municipal electric entity feeling the financial pain of the February cold snap. Beginning Feb. 12, brutal low temperatures helped create the circumstances where record electricity prices impacted utilities across the Southwest Power Pool (SPP) region and portions of the Midcontinent Independent System Operator (MISO) region, which affects MMMPEP. Electricity prices, which are normally in the range of $20 to $30 per megawatt hour (MWh) traded as high as $4,000 per MWh, according to MPUA.
Instead of absorbing the entire increased cost from February in one month, MMMPEP, as a group, has agreed to mitigate the cost through a revolving line of credit for 24 months, according to MPUA. That will allow the cities to spread the extra cost to customers over 24 months.
MMMPEP members include Salem, Cuba, Sullivan, Steelville, Newburg, Richland, St. Robert, Houston, Cabool, Mountain View, Mansfield, Willow Springs and Seymour.
Among area communities seeing large increases from 2020 to 2021 are:
• Houston, $166,387 to $973,241;
• Cabool, $189,425 to $973,048;
• Mountain View, $156,677 to $951,648;
• Newburg, $19,683 to $138,580;
• St. Robert, $327,126 to $2.1 million;
• Steelville, $113,228 to $667,688;
• Sullivan, $532,879 to $3.2 million;
• Willow Springs, $151,880 to $842,571.
More than 100 state legislators, representing a bipartisan majority of the General Assembly, urged Governor Parson’s administration last week to establish an emergency fund, set aside to allow local municipal utilities impacted by the recent weather events in February to apply for 0% interest loans, according to a press release from MPUA. The requested $50 million loan fund would allow for utilities to borrow against the fund for up to five years.
“The severe winter storm impacted communities from all corners of the state,” said John Twitty, President and CEO of the Missouri Public Utility Alliance. “This vital set-aside would allow local hometown utilities a resource to draw upon and ease the short-term impact on customers over time.”