Extreme winter weather leads to spike in electric, natural gas costs

February’s winter blast means slight rise in utility bills for Mt. Vernon residents, businesses in foreseeable future
 
The Mt. Vernon Board of Aldermen approved an increase in the fuel adjustment charge on the utility bills of Mt. Vernon residents during their meeting on Tuesday, March 9. The fuel adjustment charges was raised from $0.007138 to $0.017024 per kilowatt hour (kwh), an increase of $0.009886 per kwh. For example, if a customer uses 1,000 kwh each month, they will see an increase in their bill of $9.88.
 
Polar vortex causes spike in energy costs:
The increase in the fuel adjustment charge follows the polar vortex which brought frigid temperatures and heavy snow into the area last month. At the meeting, Mt. Vernon City Administrator Max Springer told the board that the extreme cold that the vortex brought into the area created a spike in energy prices; electricity shot up from $20-30 per megawatt hour (MWh) to $4,000 per MWh, while natural gas rose in price from $3 per dekatherm (dth) to $1,000 per dth.
As a result, the Southwest Missouri Public Energy Pool (SWMPEP), of which Mt. Vernon is a member, received a bill of $9 million for power purchased in February. The SEMPEP had a reserve of $1.3 million, which was applied to the bill. The remaining $7.7 million was financed through a revolving line of credit (RLOC) through the Missouri Public Utility Alliance (MPUA).
 
Mt. Vernon finances $2.6 million through MPUA:
Mt. Vernon is responsible for one third of the amount financed through the MPUA, or $2.6 million. However, that is the total amount which is being financed, but not the amount the city will pay. In response to a media request, Springer explained that the city will only have to pay what it actually used in power.
“We received an estimated bill for February of $1,588,381.22,” he said. “$1,282,317.77 of that amount was increase in the market price for the time period from Feb. 12 to Feb. 20, when the frigid temperatures drove the demand up. The spike in natural gas caused the generation cost to climb.” Springer added that this is five times what the city normally pays in energy costs for the month of February. January’s charge was approximately $308,000. Monett, the other power pool partner, will be responsible for twice of what Mt. Vernon was billed.

 Actual costs to be known in a couple of weeks:
In a couple of weeks, Mt. Vernon’s actual energy cost for February will be known, and that will be paid out of the $2.6 million.
At the meeting, Springer told the board that the city could either finance the amount established with the MPUA through the RLOC and pay in monthly installments of $108,333.33 with an interest rate of 1.3-percent over two years, which would cost the city $70,000 in interest, or they could pay the actual cost out of their reserves. The board voted to pay out of the city’s reserves.
The board also voted to approve the increase in the fuel charge, which Springer said would generate about $520,000 per year to replenish the reserve fund. The increase will expire when the full amount is repaid.
 
In other business:
The board approved a change order in the Mt. Vernon Skate Park project which would add a canopy and a bench to the concept plan at an additional cost of $13,000. Springer told the board that the city wouldn’t have to pay the $13,000; the cost would be paid from money “collected from the public to assist in making the skate park a reality.”
The board also approved a change order to the new ’76 Park restrooms. Springer said there were no toilets for users with special needs in the main restrooms, just the family restroom. To correct this in the design, one urinal was removed from the men’s restroom and a water closet from the women’s restroom, at an additional cost of $3,115.
Finally, the board gave the city the authority to solicit bids for the manhole and line re-connect behind the Schreiber plant. The estimated cost for the project will be $34,371.