Jamie Munks
The State Journal-Register
A combination of a City Water, Light and Power electric rate increase and some financial restructuring could get the city-owned utility out of an $8 million hole. Chief utilities engineer Eric Hobbie on Tuesday, for the second week in a row, addressed aldermen about CWLP’s precarious situation.
Hobbie presented a package of possible options that could allow, but doesn’t guarantee, the utility avoiding a technical default when the fiscal year closes Feb. 28. The utility was in default at the conclusion of fiscal 2012, meaning its cash on hand did not meet the requirements of its debt.
In order for the utility to close its multimillion-dollar gap, an electric rate restructuring could mean hikes of $12 per month for non-senior residential CWLP electric customers and $5 per month for senior residential customers. That, and monthly increases for commercial customers that depend on the size of the company, are among a series of options city officials could choose to take to keep its utility from going into its second technical default in four years.
After some cool summer temperatures and other factors, less-than-expected revenue means the utility must make up roughly $8 million to avoid a default, by either generating additional revenues through other means, cutting spending or a combination of the two. Another default could result in a credit downgrade, cancellation of a line of credit and an increase in rating scrutiny.
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“We’ve just kind of scratched the surface tonight, I don’t think any of us knew you were going to bring a rate increase concept to us tonight,” Ward 7 Ald. Joe McMenamin told Hobbie, adding that the city’s “crown jewel is turning from an asset to a liability.”
In other business Tuesday, the city council in a 9-1 vote passed an anti-harassment and nondiscrimination policy that replaces a sexual harassment policy that some city officials called outdated, and introduces language that prohibits discrimination among the city’s ranks on the basis of a number of factors, including race, age, sexual orientation and gender identity and expression, among about a dozen other specific things.
McMenamin cast the lone negative vote, which he said was because he wanted more information about how the city policy fits in with state law.
Joe McMenamin for Ward 7 