Board of Aldermen - Regular Meeting

the united states of america and to the republic for which it stands one nation under god indivisible with liberty and justice for all welcome all the member colson bench here in collecti

Here, Palmer.

Here.

Wren. Here. Alderman member Starr is absent. Mayor Whitsitt.

Here.

We have a quorum.

Thank you. Thank you. Welcome to our visitors. David, welcome. Is this Josh? Yes. Welcome. We're new chair of the finance committee starts right right Russian to accept. So, yeah, before.

I wasn't expecting some points real quick.

Honestly, I don't think we've really found anything too heavy in corrections. It's starting on Monday, so that's exciting news. But besides that, that's what I've got to report. Can I add one thing? Yes, absolutely.

The EC credit applications that have been received through May 20th for current customers, that credit will appear on this bill that will go out at the end of the month.

That's my report. Do I have to motion?

Yes. All right. That's what they always make me do.

All right. One of the words I say. I move to finalize the consent agenda. To accept the consent agenda. I move to accept the consent agenda.

Thank you.

Do I have a second? I have a motion to accept and a second. All in favor? 5-0. public comments if you have any public comments to say to me hearing none i have something i need to advise all of you we did receive a letter from the missouri state auditor today regarding the uh performance audit that was requested of the state of missouri Um, I'll just read it to you. It's dated May the 19th to Mr. Bruin. What's it make a mistake. Section 29 dot two 30 revised statutes of Missouri. The state auditor's office will be performing an audit of the city of Odessa. The Lafayette county clerk has certified in 434 signatures. submitted our signatures of registered resident voters. These signatures meet the requirements for a petition audit of the City of Odessa. The required number of signatures for a petition audit of the City of Odessa is 15 percent of the number of votes cast in the last gubernatorial election with a minimum requirement of 392 The Lafayette County Clerk has determined there were 2,611 votes cast. As 15% of 2,611 is 392, the minimum number of signatures required is 392. The estimated cost of the audit is $85,000 to $135,000, as stated on the petition signature form. First one to section 29.230 revised statutes of Missouri. The city of Odessa will pay the actual cost of the audit upon completion of the audit. Please make appropriate plans to budget for this cost. We will contact you before we begin the audit to discuss the audit process and any questions you may have. If you have questions regarding this information, please contact me at and then it lists your Her phone number, sincerely, Lori Melton, CPA. That was a perceived accident call today, May 26th. The letter dated May the 19th.

Okay. Would you say that cost of the audit again? $85,000 to $150,000.

$135,000. I'm sorry, 135,000, and I believe that's a standard estimated cost that they list in their frequently asked questions. 85,000 to 135,000 is the estimated range. Any other questions?

Okay.

new business bill number 2026-21 i will accept a motion to accept i will receive a motion to accept first reading for the introduction and reading first reading of bill number 2026-21 of the proposed ordinance amending chapter 12 article 11 licenses division one generally section 12 to 35 inspections of the code of ordinances of the city of odessa make a motion with the bill number 2026-21 first reading amend ordinance inspections alderman platnick so moved second All in favor? No, discussion first. Discussion? Yes.

Discussion?

All in favor? Okay.

I live in the world of school.

the world of school is not the same as the world of commercial businesses um so this is this is what i've found looking this up said both commercial businesses and schools are subject to annual fire safety inspections um commercial businesses is typically make sure The exits aren't blocked, fire extinguishers are properly tagged, and electrical systems are up to code. Schools are classified as educational occupancy and face strict going policies and scrutiny. So I know the ones when they come into school, I mean, they check everything. The Missouri Department of Public Safety, Division of Fire Safety, strongly encourages commercial businesses to have an annual fire safety inspection. In Missouri, fire and building codes are adopted by a local level and there's no state requirement for it. So if we don't, if we go along with this, we're not, from what I've read, going against any state policy things. So I guess my question is, so we used to have someone who went with the fire chief and did these, and now we don't. So then is the fire chief just not interested in doing it?

We have had conversations with them, and they have expressed that they don't have the capacity to take this on or assist at this time. We, I will say just some background in history. So we used to have a trained inspector. We moved away. She retired in 2020 and we filled that position with a community development coordinator who is not an inspector. And that's when we started seeking out IBTS and having our building inspections for new construction and things like that. contracted out by the third party company. But we still conducted the business license inspections internally by the community development coordinator. Now we have filled that position yet again from the last retirement. And upon evaluating that, we realized that this is not something that's within a coordinator positions realm. It is an inspector positions realm, 100%. And it is fire related. So there is that. I'm not personally saying that the fire department should be the one doing it. In a lot of communities, the fire department does do these types of inspections. There is importance behind these and we want to work towards that. Our goal for this year is to work towards stopping consulting with IBTS and moving towards our own internal inspector. That is our goal, 100%. So that's why we wanted to, we didn't want to just remove the safety inspections completely from the code because we still see the value in doing them, but it's not something that should be done with the position that we have today. But we would like to continue them because of the need, the safety component and need to it. And it is very burdensome on, especially with the amount of development that we're seeing right now. The community development position is jam-packed. She's just inundated with permits, building permits at this time. Whenever we go through, typically when we go through these inspections, that position basically drops everything for three to four weeks and only does inspections. And we just don't have Just as the fire doesn't have the capacity to do it, we also don't have the capacity to do it at this time either. So we want to make sure it's done and we want to work towards that. So our goal would be to have inspections done before the end of the year or if not next year, but we can't do them before business licenses are due. Is it July 1? So we would have to have these done by July 1. We just can't do it. So we've written this in a way that, because before it said, you can see where it's crossed out. It just says are done annually upon every renewal. So in order to renew, you have to have an inspection. So we wanted to rewrite this a little bit to make it alleviate the timeline that says this has to be done by June, July 1. And then we also added the occupancy inspection, which IBTS can do. We do occupancy inspections occasionally, but making those mandatory upon any new business opening at all helps to ensure that from day one that they open, they have the necessary fire egress and lighted signage and all of that. the beginning and we're not trying to tell them to get it after they've been in business for five years so um maybe this is some we can have further discussion with the fire department and

and not having the bandwidth to do that. But then it seems like it would be in their best interest to check out buildings because they're going to be the ones responding to those fires if they happen. So that would be

i mean that just seems like a common sense thing and just for clarification this has never been a full-blown fire inspection it is only a safety inspection and it only checks the three things which are the um i think they're written in here somewhere exit lights exit lights fire extinguishers and the the flood lighting so that from the origin of this ordinance. That's been what the three things that have been inspected. Sybil would also look at the electrical panel and things like that, but that's because she was a trained inspector and was able to identify anything that was life threatening, you know, an immediate safety risk and things like that.

Then the other thing I had is The statement that says not more than once a year, but what if there's a reported violation or some kind of safety issue, then should we have some kind of wording in there to say not more than once a year, unless something's noted? Yeah. I don't really know how to word that, but I don't think we just want to blanket say, you're never going to have one more than once a year, because what if a customer sees something of concern?

Yeah. And it didn't say, not saying that we shouldn't do it now, but it didn't say anything like that prior to. if our legal was here i'm sure they could probably um tell us what our rights are if there is an immediate public threat i assume that we have the ability to but i could be wrong that was my third thing i was going to say is um by doing it changing um as it's recommended does that create any additional liability to us i don't know we should really put that one

I said by changing it to the way that it's recommended, does that create any additional or any liability to the city?

So with this, it would be, you're saying with this, it would be when they, when a business opens.

There's two, there's two of them. So a is when they were initially open and B would be the annual one time up to one time or at minimum one time per year. So, and the, I will clarify to the occupancy inspection is a lot more detailed than the annual safety inspection. The safety inspection is just going to inspect those three things, the fire extinguishers, making sure your fire extinguishers are up to date and not three years old type of thing. Make sure your exit lights are on the proper doors. They turn on, they're lighted. And then the flood lighting, make sure it will turn on as well. There's like a test button on all of those. So A is for everything. Like we just had an occupancy inspection and one of the things IBTS noted was one, fire extinguishers and two was the hood inspected or the hood needs to be inspected. And then the other thing was just simply something, the code says that on your front door, you have to say, this door is only accessible during business hours or something. I don't remember exactly what it said, but my point is, is that the occupancy inspection from IBTS specifically will go into a much deeper, and they also provide the occupancy load at that time too.

And that's on every business, no matter what.

Yes. And that was not in our code before as a requirement. So we wanted to add that.

But then even after they're open, they would still have an inspection once a year or the safety inspection? Just the safety inspection.

Correct. I agree. I think we could easily add in there not more than one time per year unless

unless a code complaint is submitted or something like that also in that paragraph after the city where it reads the city is hereby authorized so that we can assign made a contractor for the fire district eventually uh should we add the city or its designee is hereby authorized okay

Especially with the fact that we already use IBTS. So if we were to, it would cost us significantly to have IBTS inspect each business annually. But if it came down to that, we would be covered by this ordinance. So in the wording that it says, they would have the safety inspection on an as-needed basis. that say that many or may not happen when they renew their license correct we're trying to alleviate that you have to have a safety inspection upon renewal because that's creating the need for us to inspect like 500 businesses in of one month time frame so if we make it so it basically allows us to spread out that inspection period amongst the entire year instead of just one month when everyone's renewing at the same time, was the intent.

Did they not have an inspection?

Arguably. We don't have anyone to inspect it right now, so there's that.

I don't know. I don't like it. I wouldn't like them to not have any kind of inspection.

The only thing I would say, then, is that we literally just strike this section of the code until we have our own inspector, then. That would be my other suggestion.

So then they would ?

Correct.

Do you anticipate this being a quick process? Not safety inspections, but if we just did occupancy, and then I got to know when it's a delay, business is getting open. Is there a way to get an occupancy inspection from a company that will control the schedule?

They typically have a two to three week scheduling. And we're pretty upfront about that. Anytime an inspection or anything's needed. that they need to schedule in advance because of that turnaround time.

Yeah, and obviously the business owner would just be up to them to schedule in advance that way they can open on time.

Like the one that we just did was, they're not opening for, they don't even have their business license yet, but they went ahead and got the inspection just so they could have it and know what else was needed before they could open.

Well, they can do it as soon as they finish the building. I'm not very concerned by any of it, to be honest. I think the occupancy inspection is pretty robust. Now, for older businesses that haven't had safety inspections, you know, limiting, or not limiting, but make it where they can go all year to get that inspection that helps as well. But occupancy inspections are usually pretty robust.

We really are trying to write it in a way that is permanent to our code, but allow us some leniency to get a new inspector. That was the goal behind this ordinance and the way it's drafted.

And we don't want to delay anybody based off of us not having the personal time.

Right now we cannot approve any business license renewals because we don't have the ability to inspect them. That's a part of the inspection process. So all renewals, the First renewal letter went out May 1st. I think when I last looked, there were 68 applications and we're not touching any of them until we have a revision to the code. What if we had something in here that gave, you know, after their license is renewed, they have 90 days or 180 days to get the inspection once their license is renewed.

So then it would get done. It just doesn't need to be before the license is renewed.

Well, and I think operationally we can make sure that when we do have an inspector that ideally when we do have an inspector, they would get inspected before the license renewal. That would be our goal, but we don't have that ability. So if we say 90 days from now, then we have 90 days to hire an inspector and have them inspect everything. So, We don't, it's just not, this gives us the leniency to be able to flex the need for inspections, but also give us time to hire someone. And because I don't know how soon we can truly hire someone. I don't, our goal is by the end of the year to hire someone.

You guys are essentially trying to save the safety inspections on a yearly basis without interrupting.

And I see that. I'm going to step back to the fire department. Did they give you a reason for a they said they don't have the staff, the time? I kind of if it's just if it's looking at fire extinguishers, if it's looking at path of egress and lighting. know how fast the lee summit people come in our building and are out so kind of concerned about that if they're receiving some of our tax dollars but they don't have time yeah that's a whole nother issue but they need to be concerned to be concerned about that did they mention i'll just leave it that it's a staffing issue um

I did not speak directly to a fire district employee, but I believe that it's a staffing issue. Just like the city has a staffing issue with someone with time to go about doing it, with it being stretched out to be done over a year other than the initial occupancy, there's certainly plenty of time to schedule it Uh, it doesn't seem to me looking at it. I'm no professional, but it doesn't seem to me to be something that's very time consuming looking at it. Uh, my personal opinion is that it's something that the fire district should be providing to their taxpayers within the city limits of Odessa. We, the city funds a good portion of their budget. Um, I think they do. have a responsibility to the taxpayers and the businesses in Odessa. So as a taxpayer to the fire district, I would like to see them do it. That's a decision that they have to make on their own.

I didn't know that was something that the fire department could just...

The fire department is legally, by state law, they have to inspect child care, locations and nursing homes. But they do not, by state law, have to inspect businesses. But they kind of have an invested interest in doing so. That's my personal opinion. So do we want to Approve the first reading and then approve a second reading with the amendment for that sentence so that we can issue our merchant licenses and continue inspections over the next year. Perhaps contracting it with someone. It may be that eventually we can even contract with the fire district.

two changes were uh being able to delegate and then being able to inspect uh a second time if something was yeah like okay yeah i'm fine with those changes i don't think we can really push it to meeting though if so we need to first accept first reading all in favor of accepting the first grading plan all opposed we change it after the exception

Approved. So we need to approve for one. We just did. Okay. So that's five is for the first reading.

Okay. Now go ahead and redo the second reading.

And now do I have a motion to accept second reading? And while I need to read. Yeah. I will accept a motion to accept the second reading of Bill number 2026-21, an ordinance of the City of Odessa, Missouri, amending Chapter 12, Article 2, Licenses Division 1, generally Section 12-35, Inspections of the Code of Ordinances of the City of Odessa, as amended as an ordinance. Do I have a motion to accept?

mr mayor i move that we accept bill number 2026-21 second reading amend ordinance inspections as amended and approved as an ordinance i have a motion do i have a second i have a motion and a second all those members star no i'm sorry palmer yes bench yes wren yes polson yes plaquey yes Motion carried, given ordinance number 3185.

Thank you. Now the moment we've all been waiting for. Electrical workshop.

Do you want me to pass these out or not?

Hang on to those. We'll get to that, hopefully. So I'm going to try to go fairly quickly through the first part of this. If anyone has any questions, please stop me so we can make it.

Does everyone have the slides?

Everybody have slides?

He also has bigger slides if you want bigger slides.

If anybody wants something easier to read, I do have large ones. I'll take one. Okay. I appreciate it.

Don't trip on that cord.

If you're not trip on the cord.

Mayor, if you want to sit here, you can.

The seat's open. I'll take the large one. I just got that to that chart.

Yeah.

And I don't know how much we'll spend on it, but it's in there. I did make these so they're free to anybody who wants them. In here. So the first few slides of this are really an overview of what most of you all have already seen, but I want to make sure everybody's on the same page as we go through. So who's who's driving this are you driving okay i just want to make sure somebody is all right because we're fairly quick to a point and then we'll slow down because we'll be talking so the background on this we did a cost of service that we completed march 2026 during that i presented a cost estimate and fairness of current rates discussion and also also offered up two different plans at the time knowing that we probably wouldn't adopt those straight off the off the rail that this is really just information that's what cost of service is for is information to make a educated decision on how you want to go about your rates and so with that i gave a three and four year plan that would that would work uh we also during that time we're in the middle of what i call an eca rehab uh that affected the 2019 to 2026 numbers this will be kind of more important here in a minute as to why I put that in here. There was a request for adjustment of the rate plan since the cost of service. We looked at splitting commercial, which was one of the options that I did present, but we've gone further now and developed some options there. We also were talking about trying to be as competitive as possible with the Higginsville and Evergy. We just have to do what's best for Odessa on that front. I'm probably not going to get a lot into that unless pressed, but we can look at it more. Can we leave the question that was asked, can we leave the base flat and do most of the difference in the energy charge? uh for residential and really the second half of that commercial rate also trying to stay with the same base but form the form the two pieces the small and large so that it's all in the in the other charges so i have attended that we'll see that City and Utility called for this workshop so that we can all get on the same page as far as all the information that's been provided, all the different options that have been discussed, and hopefully help guide you all into an acceptable rate situation that you can adopt.

Especially given that this conversation has split between two boards. So we have new members and get everyone refreshed.

That's right. So that's why I felt like they needed to do this rehash. everybody wasn't there all right so this is a little bit smaller print but this is everything that went into the cost of service as a basis of the decisions and information that i provided at the end of that study all of these things i wasn't going to read them all but you all can see them it's extensive it's deep the reason it's this deep is because of the method we use and i'm going to go through that here in just a moment Yeah, let's do it. So at Algar Martin over the last, I think going back probably 35 years, the cost of service has always been done the way I did this. We attack the utility method first with all the new changes that NARUC which is the national, I can't quote it, but it's the national board that does these kind of assessments on rates. And they have guidelines. APPA is guidelines for running utilities, whether it be transmission, distribution, generation, best practice as of today. And of course, we did follow your accounting. So we use your accounting to understand how this utility works specifically. Not just generically, so that's why the long list of things, but you don't get the entire picture in hand. All right, so the first thing we do is we look at how each of the accounts in your accounting, how they relate to each piece of the cost behavior, whether it changes with kilowatt or demand use, or changes with kilowatt hours, which is demand over time, which is energy use, which most people understand that one, but not the first. And then how much of it is a cost just because you have another customer? or some of the fixed costs we stretch those across every customer because they don't change they're just the cost of doing business and so the more people you have the more you get spread that out so the more people moving down the more awesome that is So then we assign those costs to parts of the electric utility function, whether it be generation, purchases of power, distribution, or transmission. In your case, transmission and purchasing power kind of blend a little bit, but we did pull that apart because part of it is slightly pushed by demand. So the more demand your commercial uses or industrial uses, the more your provider has to build more stuff. And then, so they pass that cost right back. So part of it gets that so that it kind of scales with where you are and what we foresee happening in the future. The part that's on energy, uh, Well, that one's pretty straightforward. It's pretty much everything that's left over after we do the customer-based piece. So all the fixed costs gets assigned, all the per customer costs gets assigned, and then what's left over usually ends up in the energy charge because Later, we'll probably use that more and not push as much on what you call base rate for that connection charge. So we have to make it up somewhere that's where it all goes. Those functions are then assigned to each rate class and how those rate classes use those function T. Your person that's on a primary meter doesn't lose any distribution. They do, however, have billing. And they cover some of that costs and it fixed costs and they also have transmission. So part of your provider cost for the transmission piece where it's charged to them. But a lot of those other things don't get charged because they don't use everybody else uses distribution to some degree. residential very heavily the others not as much so the way that works out it becomes percentages and it assigns across all the costs which rate class owns what cost and what and the type of cost it's actually all separated out so then we can look at what each rate is using And then we can look at what each rate is paying currently. And that's why this method lets us look at, are we being fair to each rate class? Are they paying their fair share? And we can make decisions on purpose about we're going to be nice to commercial, to increase commercial business. But then who pays for that? So then it gets put in a different rate. So those decisions aren't just accidental. They're very on purpose for your future plan. so we want to make sure that's the case sometimes you look at it and it's obvious it's skewed and when you ask and nobody knows why that's not a good thing you have to fix that or have a reason why you're leaving the way it is all right so the utility fund then takes that and we add Inflation, pay raises, current debt, current projects, some future projects, as we know. Electric use increase or decrease over trend, usually over three to five years. Also increase or decrease in population, which is going to increase or decrease your meter count. So obviously we need to adjust for that. So that's all put into this plan. Then that turns into what we call a test year. um and depending on if it's got very much growth it becomes a trigger test gear that has some growth assigned to it if it's fairly flat then we tend to use the year before because we're introducing chaos if it's not strong enough to be obvious then you're better off staying where what you had so in some cases parts of this plan kind of stayed where it was a few things that we knew absolutely were growing we already we already knew some of the purchase power costs was increasing that was announced by your provider we put that in because we knew it so at the end of that comes out some really awful rates i mean if you if you applied those direct any most utilities especially municipals are behind anywhere from 10 to 13 years And if you made that all up at once, everybody would live out. That's just how it is. So the cost of service, you can't use those numbers directly. But it does tell you how far off you are and what your goal should be over the next five to 10 years. And sooner is better if you can afford it, if you can stand it. So that's what you get out of that piece. And so this is the picture. Go ahead. This is the picture. It's kind of pretty. It breaks out all the pieces that I just said in words. So hopefully if anybody is more visual, this helps you understand just what we just went through. Right? going to move on because not all that applies but if it did that's where it goes so then after we try to set based on the city's goals that we know usually in a pre-meeting before we would do this in this case it was a post meeting or a little bit both shauna did try to help us um then at the end we come up with some rates that seem reasonable and then we apply cash method and make sure we're not going to bankrupt the whole thing overnight So the cash piece is important, but it's a secondary. And this is how that's approached. So basically we look at the bottom line required revenue requirement and one fancy way of saying all the dollars needed to keep the utility moving forward for a whole year. So everything's based on an annual basis until we get down to the rate piece and then it's got to be broken back down into months because that's how you build. So So we go through this, and then we use that as another boundary. The bare minimum, the high is the cost of service from the utility method. And then we sit down and talk just like this. And we talk about where we want to end up. So there's so many options. It's insane how many options there are to form the rates. Let's go to the next slide. I'll probably get there. I got one more slide just in case I end up this driven home here. So the biggest reason we do it is what I said, the way we do it, we do the utility method first, because we want to make sure we know exactly where the costs are coming from and that we're applying the cost to the right groups, or at least doing what we do on purpose, not by accident. Then we validate the bottom line to make sure we're not completely out. And then that takes us to the last piece where we can do cost to bill to application to utility health. We wanna make sure the utility ends up healthy within three to five years. Can't always get there in one year, unfortunately. So remember all of this, you have to keep in mind when you're selecting utility rates, All the money, all the, everything in the utility is owned by the people who use this utility in a municipal. It's not true and investor owned, but it is a municipal or a co-op. You all, everyone in this town that pays into this owns it. The money doesn't just disappear. It is put in place to make sure that the power stays on and that the city can grow commercially and industrially and have hopefully again, more money like it did back in the long days ago when I used to come shop here.

It's been a while. And that the people of Odessa have a quality system that's reliable.

Yes. And they can trust. It is critical. And this is important in the next three slides. The base thing that electrical industry across the board, no matter what kind of utility it is, you must have reliability. That means it stays on. When it goes off, you must have resiliency. That means it turns back on quickly. And to do that, you have to have the right amount of money sitting there ready to do things you have to do quickly. You have to be able to pivot. FEMA, if you have a big disaster, shows up with money about two and a half to three years after the fact. So you had to have the money to get through it to be reimbursed later. It's a wonderful thing. We want the money back. But you can't count on it. The only thing they do quickly, and I mean after about a month, is emergency housing. Everything else is a long timeline and a lot of hoops you've got to jump through, and there's no guarantee you're going to make them all. So you've got to have reserves. All right, so how in the world – let's start with what. Why in the world do we have reserves? I kind of just said it. We've got to have this money on hand for immediate costs or else power's off. Some people can't live that way. They rely on it for breathing. They rely on it for cooling and heating. And other things that we know in this town. You know more of the things than I do because I don't live here. I don't know what your critical power sort of loads are. Not yet, anyway. I'm working on it. So we've got to protect the utility from going into debt. or becoming insolvent because the first place I'm going to turn is to the city funds. And the next place I'm going to turn is to issue bonds, which is getting a loan. Now we're talking about future costs. Now we're going to spend future dollars, which are more expensive, to make it through today. We don't want to do that. Nobody wants to do that. The last thing is, what is in the electric reserve fund? So this is where we're going to go. We're going to go down these things. Emergency fund, what should they be? It's also includes the debt risk. I don't go into it very deeply, but you all know what debts you have more than I do. I just have a bottom line from a year old budget. So power cost risk, the power costs that you pay to have power from your provider goes up and down as they have increased or decreased. So you gotta be able to handle that on the fly in case it really goes crazy, because it can. The capital improvements to get to that reliability and resilience, most municipal utilities roll that all through their reserve fund so that you can basically shrink and grow that from year to year without having to deal with a lot of extra accounting and driving on that. Just control what you spend. That's the important part. And then of course, maintenance. There's a lot of maintenance needed here now. And in the future, hopefully less, if we get enough funds in place and can actually execute those maintenance plans and build up plans, then that'll shrink. But right now it's pretty heavy. So, man, I hit the purpose again. It's so important. I'm not going to read this one again because we don't have forever. But the big things is these are the kind of things that can happen. FEMA is not immediate. Some years need more maintenance or upgrades than you planned. Sometimes things sneak up on you. Commercial opportunities, this is the big one. Commercial opportunities, sometimes you're in a small window to accept and go after. If you don't have the resiliency, the redundancy that they require, and the reliability numbers that they want, they aren't going to put it in your backyard. They'll put it in somebody else's.

That's just how that is.

So it's not just the cost. It's also your performance. And this is all about performance. All right, next. So how much do we want? Well, you can't just wave on and say, I'm going to have a bazillion dollars over there. It'll be great because that would be awesome. But what most utilities use is they look at the entire plant. That means every pole, every transformer, every substation, all the parts in it, every service transformer out on the pole next to your house, by the businesses, the pad mount transformers, all that stuff. You add that all up, what would it cost to replace the whole pit and caboodle? And I used $24, $25. I did not use any inflated numbers. I came up with, you all have about 45 miles of overhead and underground together, right? And I also used your meter count that I had for 25. So it's probably short. I know it is because your numbers already increased, which is awesome. But so I've adjusted for that later. And you also have bucket trucks and they wear out about every five to six years, even though you probably used yours for about 12 or 13, right? So a lot of places don't do that. But when you have to do what you have to do, you do what you have to do. um all of that together bad estimate on my part as good as i could get it i used the same dollars i would use to estimate work plan projects for improvements over a five year span and i came up with 15 and a half million that's about six million for your double transformer substation by the way if it was wiped which big tornado that could happen um luckily you had a little tornado the last time um so Then you take a percentage of this. Next slide. Again, there's FEMA. I'm going to hammer. FEMA does not show up with a check for a while. That's going to keep happening. Anyway, so quick restoration means you need that dollar. Well, how much? So we're looking at, oh, I sure thought I'd put that on here. It's 10 to 20%. So the question you have to ask yourself is the larger utilities get away with about 10%. right that's because they have a lot of payers right they're spreading that cost way up they can recover very rapidly this is not a large utility this is a fairly small utility actually my boss even said it's a small town this is this is tough it's it's cheaper to keep it than to build it again in fact you probably couldn't if you lost it you're not going to be able to get it back because you have too few people but With the people you have it's going to take a longer time to recover from the disaster, so the money that comes out of the reserve it's going to take you more than probably a couple years to get that back maybe three or four years, even if you have the money that you needed. now all of a sudden you're going to be depleted or halfway depleted and you're just hoping nothing else happens i mean it's scary so i lean towards the 20 the 3.1 million instead of the lower number because i think the risk to get it paid back is severe in a small utility Now, that number doesn't include your debt, your inflation, your staffing costs, increases of power costs, or the capital improvement funds. That all has to be added on. Let's see what I have on the next slide. Oh, yeah, that's better. There we go. So putting those together, I came up with a 5% to 15% for your maintenance and improvements because you're behind a lot of years. Eventually, you'll get down to where that's only $1,000 or $1 million, sorry. A million to add on every year. And that would put you a little lower. But right now you're behind over 10 years. There's going to be a lot of projects. You already have a conversion project. We can't quite finish because we can't get enough money together to make one project out of it. You are needing to upgrade inside your own substation currently the way it is. uh the reliability there's going to really suffer soon and the resiliency out in the system i don't even want to talk about right now It's just painful. There's no redundancy other than from your provider to that one substation. If something wipes that substation out, I don't know what you do because you don't have anything else.

Wait until that happens. 24-hour outage is what it resulted in.

It was a 24-hour, and it was not even that bad that time. It could be a lot worse.

You're saying we need $5.5 million in reserves.

I believe so and for the cost for the substation would be how much so if you had to build a brand new substation exactly like it is It's $6 million is what my substation guys told me currently. And that's if you can even get the transformers. I hope you have some friends that have some laying around or you have some spares, which is great if you do. If you don't, they're like two and a half years to get them built. So it's not, you know, there's other problems there you got to take care of. But the dollars are big.

that would actually be cheaper than what we have.

Yes, about three and a half, three today, three and a half.

We basically have two substations and one right now because we have two voltages, but the conversions that we've been trying to work towards would get everything on one transformer.

and one voltage which would mean one substation the biggest problem with your current setup that substation has no resiliency it's all in the same spot so if anything takes out one it's probably going to take them both that's just that's the problem if you have another substation across town to the east or to the northeast somewhere wherever you've got provider line Then you'd have another source. If one got wiped out, the chances are both of them get wiped out. If they're as far apart as you can do in your territory, probably okay. It's not ideal. It's not perfect. There are tornadoes that big, but they're not going to hit both as heavy. So you might be able to get one back online and backfeed the rest of the system.

And what cost did those conversions that we're looking at?

My estimate was $1.5 million. $1.5 million? you were going at it at 240 000 a year yep is that right yep i think it's what we have i haven't thought about that project for just a little bit all right so here's some boundaries the 5.4 million but absolute minimum scary number to me 3.9 is still too low i kind of like 4.4 better as a bottom number but anyway that's how the math turned out um And that low number, I really don't believe covers any ability to improve your resilience. I think you're still locked up.

Which is our focus and our strategic plan is reliability and resiliency, strengthening that to help build trust with the community, so.

And that's why I said no less than five, but you'd be better off with five and a half, but five would work. And if you kept it that way for the next two to three years, you'd probably be okay. And then we need to reevaluate that because hopefully you'll be able to grow some things and your plant will increase in cost. So then your number should increase as well. Next slide. All right. Now, with all that, that's why my rate, recommendations have been what they are. So here's the options that I've looked at. I've looked at the flat rate, which we put in the COS originally. I don't love them, but that was the quick get your answers at the end of that cost study. We've talked about some time of use. I've heard that multiple times. We've talked about seasonal. I didn't write that up here. Well, seasonal differences in peaks I've got up here. These peak times I actually stole from Evergy and the co-op that's nearby. and kind of looked at it, and I looked at EIA data and tried DOE public information for this metal in the US, and those times I've adjusted just a little bit. I think they fit ODESA. We did have a couple of meters we had hourly data for. It fits those, although it's kind of to thin the support, but, because we only had two out of 2,000, almost 3,000. Oh, noisy.

I think one thing we can hit on, too, at the time of use. So we've talked a lot about the cost of the ECA is fluctuating because of the cost of the purchase power. So how do we reduce our cost of our purchase power? The number one end all be all way to do that is time of use because we get our rate is determined by our peak. If we lower the peak, we pay less for our utility or for electricity.

That is correct.

which is why everyone else is going to time of use because it reduces your cost overall and how much you purchase the electricity for.

Is the city's use averaged with all of the other member

So, yes, I believe so. Yes. I mean, we, but our rate is based.

No, he's saying does billing when they're filling us out. They know what our peak is. Are they taking the average of everyone's peak to determine what everyone's paying or how do they it doesn't quite work that way.

So. What they do to set their costs on every hour. as they look at an entire day and they find the overall peak from the whole mix. Okay. Then they set a cost and then they go back and they look at what your contribution to that peak was. And if I remember the contract properly, you're probably on a six month ratchet or a four month ratchet. Four months? I don't remember. They usually do a four-month ratchet. So what that means is your worst peak over the last four months and how much that contributed at the time of their peak. So they look at what they call self-peak. And then they look at coincident peak amongst all of you. And then they look at your piece of that. And then you get a paraded kind of billing. And so it's adjusted to each of you. But the overall cost is set by all of you.

The cost is set. If we make the effort to control our own fee, we get the full benefit of that.

It'll be a good benefit. I don't know about full. But it does have influence. It won't be 100%, but it'll be some good percentage.

I think that was kind of the worry is like if we reduce our

our peaks and we reduce our costs do we actually get to see it because we're in a pool yes you should see it the pool brings the whole overall cost down that's what that's for each peak saving would save money yes it would okay and in fact i think if you look at mpa's site i think it's their number one education thing they're pushing like mad because they don't want to build more generation in all the towns And none of the towns want to build up their own generation more than what they have. And you're all at the mercy in the pool of how much generation you have, but that's kind of the deal they also give you credits and you know this I think from the past uh give you credits for any duration you contribute so that helps them bring the overall cost down across the whole group as opposed to buying it from other which is what they have to do if you don't need it thank you they do have to meet the meet the power requirement no matter what so they'll buy it off market which is very expensive does our current AMI

total infrastructure support type of thing?

What we don't, the meters themselves, yes. The question is how that's implemented through ENCODE. We don't have an answer for that at this time, but our meters are measuring hourly.

we could get the data it's just having him in correct right okay so how to bill it is the question normally i don't know about encode specifically because i don't know exactly who everybody was using that i know about but usually you have to contract with them to do setting changes in the software on the reading side and you're already pulling hourly data so the meters are good it's it's the the actual billing software on this side that has to portion it out properly yep and then you got to have more rates because it's it's basically more rates yeah but they'll have to they'll have to program that and they'll charge you for it once but from what I understand it's always worth it let's see So I have looked at that. I'd love to do a deeper dive, but I think you could do a pilot on the time of use, where you are now, but just what you know. What you will see is a reduction in overall use. Your sales will go down, but also your costs will go down. so your costs hopefully will go down more than your sales because you're just going to push people off the peak and they're going to use it at night well guess what some things that they were doing because it didn't matter when they did it they won't end up doing because they'll be asleep so but things they have to do wash the laundry cool the house heat the house charge their ev if we have any i'm sure you do have some that stuff will get pushed into times that are cheaper for the city to buy the power The last one is inverted block. And I did actually do some work on inverted block on my own time. I looked at your billing for the two sets I have. So that would have been 34, 23, 24 and 24, 25. And I looked at how it would divide out. And it's based on the average use and then split into about 30% block and then a 52% block or so. And then everything else is above. And what that lets you do is kind of leave the bottom block alone. So people under 600 kilowatt hours use, you kind of leave them without any increase or just a small increase. Then you go to the middle block where average users are, which hopefully have good jobs, and you hit them slightly harder. And then your high-end users that, by golly, I hope they, even though they have probably five kids and two outbuildings, they're cooling and who knows what else, that they have a good job and can afford it because that's where the difference goes. And so that lets you be nice to your folks that don't have the big income, and you take it on the people, hopefully, who can afford it. Now, I know if I was in this pool, I'm one of the guys on the high end of the middle. I would not be excited. But you got to get it somehow. So this is another way that you can be conscientious and have a heart for your constituents and still get the money when you keep the utility going. So that's an option. And I do have rates for that if we wanted to go there.

Next slide. David, could you combine those two, the time of use and the inverted block? Because if you did, then your ones that are getting charged more would have the incentive and the load to drop during those time of use. they have the incentive. They're actually the reason our peak is up. So they have the incentive to, the better incentive to drop it.

Right. They also have an incentive, depending on where they fall on that range, but they have an incentive to use overall less to get to the, just maintain a lower bill of watch.

So each of those options, let's say you do a three block, that's three different rates. If you do a time of use, not six rates. at least right on peak and off peak at least you may you may do something extra some people go to a four layer and now you got three more that's now you got nine rates all for one one class might increase our turnover in utility billing staff so the trick the problem with it will be more phone calls for a while um the software should take care of all the billing once it's set right Now, I'm sure somebody checks some of these occasionally, right? So, all right. So flat structure, simple to understand. People know what it is. You're easy to approach and understand what your rate is going to be if you're a business wanting to move in here. That's kind of why that part of it's usually fairly flat. You usually don't split those up because commercial can't really do anything about their power use. You tell them use it at night, the best they might do is add another shift to the work if you're lucky, and they're going to do heavier work where it's cheaper. So now your people, half the community is nocturnal. That has other ramifications to your shopping and other things. um there's not really any signal for conservation or for getting off the peak uh you know this it's where you are now um and so that's just how that is and it doesn't help the small user you raise everybody no matter what so that's so the next slide Time of use, of course, we've talked about all these things. It does drive a little conservation. It does get people off your peak. It pairs well with inverted block. How did you know? I was going to tell you. Anyway, so you can really put the pressure in the right places to get the cost where you want it. Inverted block, here it is. So the big thing here is just it's nice to the small users, and it puts a little stronger signal on conservation. than any of the others.

Arguably, splitting commercial is a version of inverted block.

It kind of is. How did you know? Yeah. So there's an interesting thing about that. Next slide. Split commercial. So my favorite thing that I had forgotten to have done, haven't had to change in a long time, I split this and I was looking at the charts on it, which is why you'll see them in here. I was actually kind of, I was like a shock because I was like, Hey, it lowered everything just by splitting it and putting better rates on the two pieces to cover just them. So how did I split it? So I'm going to say in words here, and then we're going to look at a little bit of what we did to do this. So my good friend here, Josh, helped me, but kilowatt hours and kilowatts on the chart for all the commercial class. And we looked at contribution and we sorted them from low to high and pretty straightforward. And how do you choose where to cut? Well, it's pretty obvious that even your non-commercial users can have 25 KVA transformers out there occasionally. A lot of small business has that, but they don't use it all. Your bigger ones have 50s, 75s, 100s, or even crazy, usually dump the industrial here, 1,000. So we know that there's a divider here. We'd like to say it's 25. Well, how do we prove to ourselves that that's the right thing? I'm going to make you go back and forth. I apologize. Let's go forward. So here's the, this is a chart. I messed with this one after John had a beautiful job. Let's go one more. Let's show, we'll show his first. So his is nice and smooth. They're all in order. Everything's awesome. Down at the bottom, you can't see a little tiny little things. I believe those on this one are kilowatts. And what kilowatts is? Kilowatt hours. Kilowatt hours. So everything on here is kilowatt hours sorted by energy use from small to high. And I said, wouldn't it be interesting if about 50% of this, which would be about half the contribution to the entire class, was anywhere near 25 kVA or kilowatt demand? And so we picked a couple numbers right around 51, 52, because it was at the halfway point. So then go backwards one. So then I said, well, I'm going to sort this by demand. So it gets a little more funky. But what I saw was the one we picked at 51-ish, or at 51, 52% was right next to 53%, which was right next to 25 kilowatt demand. was like well isn't that isn't that nice so exactly where i wanted it turned out to be exactly what made sense half the class is low and half the class energy use wise is high well how many people is an ink well you wouldn't think half your people are in your hive most of your businesses are small businesses a little sandwich shop or a little boutique or whatever they're not going to be in a large business, even if they stayed open 24-7 and used a lot of energy. So now I'm diving in more on the kilowatt demand. So next forward. And so we will graph that and those two. The next two did the same thing. They all matched up. Everything lined up. So 25, can you believe it? I was lucky. So the little chart there at the time was the number of commercials I had. And I know it's probably visible on your sheets, but I can't create it there. I'm going to flip my manual.

245 small and 23 large.

There you go. So, so then we pulled the list. I'm not going to show it, but Shauna and Kathy and I looked at it and we, they agreed they looked like businesses that made sense to them or large gas stations fast food Etc and they worked a little boutique some little sandwich shops so that made sense it makes sense and everywhere I've ever seen split commercial which is almost everywhere that's kind of how it falls so that's how I split it I know it seems crazy but At the same time, it's also got logic to it. And it yielded what everybody always has in their small and large. I wasn't surprised afterwards, but before I started, I wasn't sure how it was going to thread. All right.

And basically the rep, if we were to just keep like your original plan, wasn't to split it. And we just had a new commercial rate. That was actually a little bit less than our current commercial rate that

revenue versus this revenue at the 245 and 23 split is comparable we thought it was going to be exactly the same but when we got done it actually improves your collection slightly so let's look at what we ended up with and you don't have to adopt this keep going forward i was going to go back and read some more but we're not going to so this is the small commercial for those who've seen this in the report I'm going to describe this. Follow with me best you can, anybody who's new. What this is, is called an all-in bundled rate, dollars per kilowatt hour. What it does, it takes any structure and it takes all the pieces and converts them as if the entire thing was an energy charge. And we do that to compare the amount of funds that can be extracted from a given rate. And the lines are supposed to show two things one you can draw depending on how much your bill is across the bottom of the percent that's percent of your of the of the transformer you're using and most most commercial is higher it's more than 60 percent most residentials down 30 to 37 and yours is no different you're at 36 percent i think is what we came out with so if you draw a line where your actual energy use is um then that's your bill. That's what this really is. So it's simpler than it looks. But when you draw it out like this, we can see over the usage how your cost per kilowatt hour is affecting your bill. And the three, the black one was the cost of service. And I actually split the cost of service, which took me about three hours, but I split it out for the two groups as if it was already that way to begin with. And I did that for free. You're lucky. I did that all my time. And I was very happy to see that your cost of service for the two groups pulled apart actually came down. It was interesting. But also the rates, then your current rate, I believe is the pink one. And the new rate that I came up with was actually the teal. But the interesting thing is, go ahead and go to the next slide. This is the large. Well, notice it's above the cost of service. So between the two, amazingly, you collect 2% more than you were. It was interesting. Now, I lowered the small by 15%. That's the handout. We could do the handout now. On the back of this handout, I've got the split of commercial, and I've also got some other rates we'll talk about because of what Bruce said there, or what we ended up from your calculation. Let me remind everybody at the moment.

Good stuff down there.

Let me remind you, I'm not giving you an exact rate at the moment. I'm wanting to understand where you want to be And either we arrive at that together tonight or I can do a little work and give you some options right around what you're trying to do. That's the whole point. The cost gave us the worst case and what we need to work towards over time and A lot of what we have is where you are now, which is definitely too low. And in the three-year plan in the CLS before, I was trying to draw the line of absolute bare minimum we needed to stay alive. And your goals are a little more than that. We'd like to do a little better. So we're moving more towards a four-year with a slight adjustment that actually I got from Bruce's new numbers that I didn't have yet. there's new kilowatt hours, a new number of meters. And so I adjusted everything with that. So on the back of this sheet, there's a small and large split. And this is where what made sense to me, I was off. I lowered it by 14%, not 15, I apologize. But the large went up by 16. And so we end up with an overall increase of 2% from where you started, which is kind of awesome. because I don't know about you I kind of like these rates but it's up to you all on the split commercial I don't I don't think uh there's there's certainly room to wiggle that any way you want but uh those look pretty reasonable compared to where you are currently but I'll leave that up to you to tell me what you want to do there yeah surely it's digitally competitive That's a good question. I've seen from $65 for the rate, for the connection charges I like to call it, and I've certainly seen higher energy charge than that, but we've seen slightly lower too. Higginsville's given away part of the residential, but they are charging significantly to commercial.

so i'm confused because higher right yes i don't is your base not adjusted on here why is it 40 75 for both we left it flat now i can change that but the usage is the usage looks like it's more here first month the energy use but the demand charge makes all the difference It's not as attractive as what you originally proposed because what you originally proposed, the small commercial was a reduction in their current rate.

I did. That's true. And we still can't.

And this, I mean, it is, it's a $2, $2. Basically we can go further and leave the, and then it reduces the energy usage by how you say, how would you say that? 2 cents, 1.3 to 0.11. Yes. 2 cents. Right.

along with your recommended rates the eca base rate should increase every year as well uh you wouldn't have to move it every year but you definitely should reevaluate every couple years and that currently the one that i had proposed in the cos would drop you down to about a hundred thousand just because it probably won't be a hundred thousand but that's kind of the risk level what's the top table The top is actually residential and that's a three year plan. It's just another option.

So this is a whole new plan. I think we all need to be very clear about this. This is a whole new plan than what was proposed in the Great study report.

And the other reason is all of these, both of these are based on numbers you had in yours for kilowatt hour use, which is higher now, and your customers were higher. So I put those in and try to give advantage for that while we were trying to come up with another balance point. That does not mean, again, I'm not saying these should be even rates. I'm saying this is another option. So we need to understand together what we want to drive towards and set something. Always, yeah. And then I can do the extra footwork To make it all be consistent. That's that's kind of how I look at the rates. I look at it as if you want to do a certain thing here. Will that drive something else here? And you got to make everything consistent so that you get the revenue.

This one is a little bit. This proposal is a little.

less drastic yes this is that still achieves the same goal this is the five percent every year that i think you were looking at i tried to go back and use your your baseline numbers and then drive towards that uh what you had in your spreadsheet was uh short it was five and then four and then three and a half percent and the revenue was not going to balance out for five years so i didn't want to leave you there it was too loud this one in two years you'll get back on your feet all the way but you'll have money to survive so the next slide is what was originally recommended right i believe so let's see yeah this is this is the three-year report of how the cos fill out and what the absolute difference between where you were at the time and where your cost of service was at the end of that study so you have to go another chart forward i believe although there's some numbers there for residential but here was the three-year oh that's this one that's the new one go another one forward that's the four years from the cos okay I know it gets a little confusing, but we haven't really settled on an option. Right.

We're giving you more options to make it even more of an easy decision.

So again, my hope is from all this discussion, you each now have an idea in mind of where you think we should be going. and then we should talk about that and then from that we should drive at least the first year and i can i can break that down something consistent for for three or four year okay do you want to go through any more slides or do we want to start that discussion now we can go forward let's see that's the old i believe

That was versus.

Yeah, I did put versus numbers in here too. And I do have charts for it because I didn't run them. But anybody know it? Everybody is okay with what kilowatt demand is and kilowatt hours are? Anybody lost at all? Please explain it. You're going to make me explain it? This is an interesting slide because you can have a 1,000-watt bulb or you can have 10, 100-watt bulbs, and that's a same demand, 1,000. Well, one kilowatt. One kilowatt demand. So this was easier to explain in the incandescent days. Do we learn them doing incandescent lights? Because LEDs don't work quite like that. But they do the same thing. It's just you'd have a lot more light for the same kilowatt. That's just demand. That's how much are you using all at the same time in an instant, okay? Next slide. Now an hour goes by. I've had them on for an hour. Well, that's a kilowatt hour. I had a kilowatt on for a whole hour. That's why your bill says whatever kilowatt hours, because you had some amount of demand, and that is added up every 15 minutes on your system, I think, on your meters. It can be 10 minutes, but either way, it accrues, and then it puts it in a little summation, and it just keeps accruing and adding it up. and so what we get is overall how much did you use energy that's kilowatt hours so if you have time it's energy use over time if it's not if it's just kilowatts and there's no time that's how much you're using in any given instance anybody have any problem with that okay and then there's one more thing that's really important and it'll be more important later when we do the system study but power is a real part and what we call an imaginary box call it imaginary i call it apparent power The pay bar. The pay bar is interesting because it supports the voltage. It's in your soda. It makes your soda good. If you didn't have any foam, it would be kind of sad. Anyway, it'd be flat, right? The soda part, though, is what you want. It's what does the energy. It's making light lights, turning motors, making air conditioner run. But if you didn't have any KVAR, the generator would skip, and you'd have no power. You'd have no voltage, so you'd have no power. So you got to have both. We like soda better than beer because the KVARs are smaller. We just need enough to support the voltage, not enough to make you wonder if there's any liquid in the glass, right? That's how it works. If you have too many KVAR, you're spending a lot of money to get the little bit of real power that you're using. So you just want enough to support, and that's good enough. uh so that's how that works and we love doing this picture anyway and i always use soda because i don't drink so there you go and then this lie is superfluous this is what you're going to get for your system study but we're not done so yeah that's a different day that's another day okay so Let's this sheet just for a quick 2nd, this very type type size. This is an overview again of the cost of service. That's what that is. And that's the 4 year rate that I had originally in the process. At the bottom is the summary. And the only thing I changed was to add. a couple lines above and below the chart about reserves and then on the back was those two new rates and then the outcome from the rates um that we had uh that we analyzed that were getting to us in the calculation sheet and kind of what how that turns out for year one two and three and also a little statement about final reserve that goes with that on the back so just any other things there

So I think we need to determine if we want a block rate structure, time of use, or inverted block, or seasonal time of use as opposed to day of the week time of use.

And by that, like a mid-term rate in crystal.

Correct. Correct. Do we need to study the time of use, do a sample maybe? The thing about time of use... it takes margin to pay our costs. Yes. And if you have people who move over to time of use, how much margin are you using? Are you losing?

Yep.

And are you at risk then of not being able to cover your costs?

Typically they see five to 12% reduced use.

We're not, I don't think we're ready for time of use, but I think it's something that we need to be open toward open to researching and understanding. I don't think we're not ready for winter and summer rates, though.

So I'm needing to ask some questions here. If you look at doing the peak time of use, then it's kind of obvious why we're doing it. And we've already talked about that. When you do seasonal only, you're saying that you're trying to reduce use in the summer because that's when your highest peak is and you're letting off in the winter time because it's not as bad. So I have to ask though, when you do that, you got to make sure you understand what you're driving behavior wise. So are you trying to get, that can have some weird, weird effects. So one is people are going to not want to run their air conditioner. They're going to go out on their porch. Maybe that's a good thing. Maybe that's what you want. Um, they're going to go into town maybe and hang out in cool places. They may not be happy about it though. And they may not, they may spend more money that way. It can go that way. Um, But you're also punishing use when it's the worst outside. I don't know if, you have to think it all through. These are secondary effects. And in this case, when you're talking seasonal, that's all I think I understand about it. I see you have a neighbor that does this. Average does this sometimes you can get on that rate and I I think what I saw is they try to collect all their funds for their margin for the year during the summer and then they let off because they've got their money well I just get some more money early I can put it in investments uh that makes sense on the investor I'm not sure I like it but that's what they're doing so we got to know what what's our driver yeah

are we what are we wanting to accomplish because we're sending signals with that yep that's right with our with our growth especially with advanced industries and you're looking at growing quite a bit with their demand um i think we had any kind of a hot summer i would say in that those two hit peak at the same time would be the avenue maybe quite a bit of a higher demand or repeat Right so that's something that we, I mean, I don't know how you anticipate that, but. But anticipate that before I have quite a bit higher fee.

that's why i like the time of use by time figuring out what your peak lump is which is almost always 6 a.m or 7 a.m to in the evening about five six yeah but in the summer and winter it shifts so that makes sense to me that you would want to drive that peak and and off peak closest to what it really is going to be by nature of the season but if you don't do the time of peak then you get into that different

in industry with our highest low would give them some reason to put bigger ship or more ship in the evening or early morning.

And maybe, I mean, you got to think about that too. Maybe you don't put it on commercial or maybe you only do it on small commercial. But your big commercial industrial primary don't make sense. You don't want to drive their nature. You want them to grow and

I thought it was a little funny that I've noticed our peak was at three, four o'clock right in there. And I figured it would be at five or six when everyone's getting home. That was not the case. It started dropping off. And the three years that I was watching to see, one year I didn't know that we were actually

dropping off at five o'clock I think also you've seen a lot more programmable thermostats in homes and so they're shifting that Peak earlier than when they want to use it so that the house is nice when they wake up or when they get home it's already cool yeah that's part of that uh evs are going to drive it crazy too because when you get home you plug in if they don't set a time on their on their charge it's going to start immediately that's going to pop it up when they get home but you can talk them into shifting that even ahead of that just put out a education because most of those systems have timers where the car can be told not to do whatever so i'm hearing that we're not quite ready for time of use or

maybe a seasonal shift is not the most beneficial to us.

Is it kind of one or the other?

No, I'm just checking it on or off the list as an option for, yeah, for what we need to do with our rates right now.

This year or the next two years, probably. We want to revisit after a couple of years.

Also our debt is, ending in 2028 for our current ami meters so we'll need to start in probably 2027 looking into new meters um to replace them because they'll be at the end of their life perfect time with a new system yeah did you say that the five year that's the numbers at the end of five years yeah that's your that's your numbers that you

Some of the rates, if you go through and look at the energy charge rates, I think some of those need to be corrected. For example, on the industrial, it goes from 9.88 down to 7.88 up to 12.38. Yeah, that's right.

there's a decrease in 29 23. i'm not being known i promise so yeah i have it here and on the commercial 2 goes from 11 up to 11.33 to 1202 to 1202 and back down to 11 73 that's up

1173 is the commercial one. Commercial one.

Yeah, the commercial two.

That's on you. You mistyped it. Our intent was to put your numbers in as well so that we didn't lose your case. But because I did run those, I do have charts for these.

I like that commercial one drops down to 11.73 from 13.83.

Then it didn't work.

That's a nice drop for them. his his numbers do not it's short about finally a thousand until year three to four and then it finally recovers okay so it this one this the five-year plan is short and then recovers on the back end yeah and then the last year it does very well but it's a lot it's five years out does that account for like meter debt in that does not so that's correct and it's uh 27 28 we're short uh 733 000 in 2029 it's short 428 000 29 30 it's finally above is that with the correct rate so is the charts wrong that's what yeah rates the way you had them so do we have an option where we're not operating in a negative so if you use if you use these then you're not we're not 100 there either so my original my original three here you start off your above water by a couple hundred thousand About 240 and improve from there. So that's why I offered those up the first time after the cost of service.

I've got the should have that on the three year. Yeah.

And that's slide 24 on page 24.

Basically, what that says is that your first year really needs to be over 5%, maybe closer to six. And then it drops to 5% and then the foreign foreign some in order to stay above water, but that was a little aggressive on over the whole time. I'm not really wanting to do that now i think i think you can back off a little more like that this we can stay on the boat um so the commercial there is perfect what does commercial do in year two three four five six i did not build those out for the split but i can't In fact, I'd probably leave them flat the first two years and reevaluate. Okay. If you change it.

But we're not going to see huge jumps from that over a four or five year.

Maybe on the third or fourth year, you're going to see a little more of a push, but by then you're going to see everybody around you go up.

So you're saying year one and two, you leave the same year three. Yeah.

Yeah. It's just a quick check. All I'm going to need is to see what your actuals are at the end of the second year, and I can turn the COS in like a few hours. It's not like a full study. It's just a drop on in and see where we are.

And does year three make us whole or get us to the 1 million of revenue added? for capital maintenance needs?

Yes, it did.

So year three, so this is a three-year, like we had a three-year plan and a four-year plan and it was like up to year three to get whole and then year four to get whole. So this is, we're whole in three years and commercial is whole in one. Yes.

Right.

And we wouldn't operate in a deficit.

I don't think so.

You're not going to be able to do a million dollars in projects the first year.

I don't want to be negative. Because at the bottom it says year one short $450,000.

Right. So you're going to have the first year you'll have $250,000 of your improvement costs. And you'll have the $2.5 million, which is about where you're getting to now. So hopefully it'll help a little bit on your reserves. And so that's not a great, that first year.

But it's still not, when you say short 450K, it's still not, we're going to have a deficit that year. It's, we're not going to reach our goal of adding 1 million for commercial or for capital and maintenance costs. That's correct.

I was reading it short because I was like. You're correct.

Yeah. You're correct.

And then year three.

It's tight. There will be a tight year. Predicted to be 4.5.

And we've, our reserves are depleted right now. So basically, but that's only for year one. This statement right here is only for year one residential.

Correct. Well, yes, that's correct. Okay.

I see. So that's only what revenue is going to do for residential only. So commercial is going to be a flat and then industrial might bring in some and um that's it for primary meters might bring in some yeah let me double check which I'm working with so would we do the three-year for industrial and primary meter that's proposed on the three-year plan along with the three-year new residential plan yes okay what's that is a pretty big jump for industrial Right? Oh, that's, yeah, 15.2. What do you mean by percent shortage? Industrial. Oh, yeah, those. Three-year plan for industrial.

So this chart you're looking at, that is the entire COS. So that would be the full catch-up. You don't want to do that. You want to do? No, that's not the 3 year plan. Right? And I didn't give you the charts in this presentation. It isn't. Okay.

Okay. When you said, it doesn't look like we're ready for time of use and that we're not ready.

Well, right now we're trying to really figure out what we're going to do with it because we didn't adopt any new rates. So rates stay completely flat. We need to come up with kind of an immediate game plan. In order to adopt time of use, we need a little bit more research from David to know what it will do, mostly because it sounds like the fear of the fact that your revenue really does drop by going to time of use. So you reduce your peak, but your revenue drops. So we need to know what that would hypothetically look like before we jumped into time of use. And I think there'd be an implementation period. We don't know how it would work on the billing side quite yet.

Yeah. You're going to have to find out costs to get there.

But I do think it's something that's very important or else everyone else on the planet wouldn't be moving towards it.

MQA wants it because they will lower their costs. Yeah.

Yeah, of course. Everybody else. They're already charging us for it, basically, in theory.

Yeah.

Okay. It's everyone's thoughts.

It's a lot.

That's my thought.

So our question basically is what do we want to set our rates at least for the coming year based on a three, four or five year program all three programs will eventually get us to uh reserves and an operating level that will support our system at very lengths of time either three four or five years correct me if i'm wrong So it's a question, I guess, of how hard we want to collect revenues from our ratepayers to get us quickly to that end result. Do we want to collect enough money to get there in three years? Are we okay with four years? Are we okay with five years? Do we want to do it in a manner that between two commercial levels. I think consensus of everybody probably is yes for that, whether it's a three, four, or five year. So we can probably settle on at least that part. Then it becomes how you set that beginning break My concern is the impact that our electric rates have on our economic development. As I was walking down Second Street on the west side of the street towards City Hall this afternoon, I got stopped for 10 minutes by a former business owner who was moving out of And she was pretty upset. She was starting to cry from having to move. Economic development isn't just attracting businesses to town. It's also retaining businesses in town. And every one of us here knows a business that left because it couldn't afford to stay open. And we can't always help that. But we need to do everything we can with our residential businesses to keep their cost to stay low. Like I said, we can't always help that business. Whatever we can do to help them, I think that was part of our job. So I'm in favor, particularly for businesses, because they've carried the burden of our electric costs so long to at least hold their costs, if not reduce it in this year, if we can. I think our residential rates are comparable to what I've seen in surrounding areas. Um, residential is not our commercial records. Residential is comparable. Commercial is not comparable. Um, I think commercial needs, needs a lot of, of our electric grids.

Mayor, do you feel like, uh, does the split that's proposed accomplish that? I'm sorry? Does the split? Do you feel like that accomplishes some right leave on those commercial?

I think that helps quite a bit. I think still the commercial rate is too high, even on the large commercial.

Where would we shift that to? It'd have to be residential or industrial.

It needs to be shifted by somehow lowering our costs. I don't know what that answer is.

Well, even with lower costs, we're not covering our costs right now. I understand. Is there an immediate solution of a lower cost to deliver?

You know, like Higginsville, Higginsville General, some of their electricity, that's probably how they lower some of their costs. Yeah. that's some of it somehow to continue to be competitively long term we've got to figure out how to order a box they also have the uh very high summer rate and a nice low winter rate yes they're picking up purple compared to the most expensive classes i'm i'm concerned any

Everyone above us in the line is covering their costs. NPOA is covering their costs. Everyone they're giving energy, Evergy is covering their costs. If anyone is, you know, giving breaks or it's still costing us an amount to deliver to all of our rate classes and we're the last man holding a bag, not doing anything right now. could put us in really bad shape at some point where we're at a point where we can't repair our system, we can't reliably deliver electricity. I did read the cost of service study. I think David and his team did a really good job of describing all the pieces that go into this. It is very complex. I like this recent, I was trying to look, I think if I'm looking at this right on the back of our page with a three-year plan, the base rate is lower than what we had proposed in this chart on the slide, I think, if I'm looking at that right. the base rates on that lot when it was 25 so I was just looking comparing what he's proposed here that base rate is lower than that right one is 25 dollars so we have 2191 here because that's a that's the minimal three-year plan is that bottom block for residential as this is yeah and she's like everybody has to be charged for financial customers ten dollars how you, what you include in your base rate affects what you pick up in your energy charge. You can have low base rate and not cover as much of your fixed costs, but you're just shifting that expense to your rate. You have to get it one way or the other, or you choose not to collect it and under collect for the service you're delivering. And that, I think that is the philosophy maybe between different engineers, different utilities, IPL, where I work, has a very low base rate, but we have to pick that up in an energy rate. So it's not like it just goes away. And I think personally capturing the appropriate amount of fixed costs that apply to everybody in that class as your base rate makes the most sense.

So we have a high base rate and a high utility rate. So now where do we go? well unless both of them are alive how do we keep charging the higher well if you don't charge that you're what it's costing you to deliver and maintain your system you're not going to have utility and that's no problem with with what happens to economic development because after a while you don't have any customers either well we don't generate something that's an important distinction we used to and that's

Part of the reason why the situation we're in now, because payers consider a loss in revenue being in the market, putting a generation on the market. So if we're comparing ourselves to the utilities that generate and get revenue from that, that's not comparing the same thing. We now rely on a pool who sets the price without being able to contribute to the market and get revenues.

there's three options on the table we rely on the pool for their rates we just sell to one place and we are 100 dependent on their rates or we work towards generating again which is going to cost i have no idea how much that would cost you could probably get a little bit of help from mpua but they're not going to pay

That's significant. It's not going to be half.

It's not impossible. It's not impossible, but it's not something we can do in the next year or two either.

And it's not really in any of our financial plans.

We need to save for it in advance.

Nobody wants to talk about raising rates, but I don't want to be sitting here talking about a bankrupt, In a few years, either we have goals to improve our system, and that does take strategic financial planning. I think that the collection of the appropriate amount of. Capital emergency reserves have built into this rate. Yeah, I'm sorry yes, the 1 on the 1 we got we got to me. I do like the split on the small and large. I think that gives our small commercial businesses a break and doesn't lump them in with some of those large ones. But I don't think today we have a cost saving measure that we get to decide we're holding rates flat or rolling.

I would agree, Amy. I think too, Bruce, you hit a good point about maintaining, keeping businesses, but if we and excuse me infrastructure that can't maintain what they need to do to make their product the electricity goes out it fails them doesn't stay on the right whatever you know that doesn't serve well for large businesses you extend that part if we can get so they can probably speak to this as far as our infrastructure and what it's capable of now but

there's a point where commercial large commercial wouldn't be interested because we don't have a resiliency we do not have a second fee so you're not going to get so you need to get there that's where you're headed you need to get and have the revenue to be able to get there so that a company will come in because you have another substation that you can feed and they're not going to be out 20 hours they know that you know he's through you know so know it's quite a bit because you don't want to lose the ones that you have but you also want to be able to i would think would be able to want to to uh plow enough ground to be able to you know to be able to uh move ahead in the future where would be better to be because we are sitting with all of our age one basket after we lost the generation in 2013 um we're we're sitting

I think, David, can you speak to back to the base rate versus the usage rate? And obviously, I guess some of what those are made up of and why, but also what the difference is between, because I think what we're not understanding is how much a three cent change in usage rate how big that is for the end user versus a three dollar base rate change which is when we're comparing ourselves to others we are we have a three three dollar higher base rate but a three cent lower usage rate that doesn't mean both of our rates are higher just it doesn't it just doesn't no it doesn't and i think that we're not understanding that part of it is a three cent usage rate is huge compared to a three dollar base rate correct can i add too if you're going if you're going to talk of that is

of the man and so there was actually three components that you're looking at and so here's what i thought was good about this rate when when it was suggested by bhmg several years ago was so long because there was no there was no hidden feats it's like buying a car and having all those hidden feeds it's like here's your rate look, we're lower here, but then when you get there and you have a demand for it. So we didn't discuss that a while ago, and when you're looking at rates and saying we're so much higher, you have to put in that demand in most things too. Correct.

And some utilities have so many riders that you have to, I think looking at it from a cost of service perspective, it's the only way that you can tell having compared to some of us. We could break our rates out into 10 tiers and say our rates are lower because tiers are lower than 2 are. There's a philosophy behind that. And maybe being the lowest rate payer but not having enough money is not grabbing us. We have a responsibility to maintain our system and funding properly. I would like to, when we get to the point where we can really settle on, some form of like a three-year plan to get it set while we continue to investigate what our options are with type of resources and what understanding impact and that may end up being something that saves us money but it might not level out so i'll go through these three points real quick then uh or four so

A lot of people just look at the base rate and the energy rate, and they think, oh, look, that rate's a lot lower. Your IOUs in this area have a little fun trick where they have the same rate three times in the summertime and two times in the winter. You have to add them all together. They look really low until you add them all together, and they're all the same numbers just to confuse their users. That'll love them.

I won't say names, you all know who it is, because I should, but, and we've said it enough times in our cost of service.

And that right here is the fear of, if we don't get to maintain our own utility, one of the independently owned is going to come in and make sure every minute of their cost is covered and every minute of investors is covered too. They lose all control.

And they don't wiggle for your commercial aspirations. So base rate, if you raise it $2, everybody's going to have that extra $2. When you raise, like you were saying, like a penny, in fact, in the cost of service, I give you that chart. what every penny every tenth of a penny in rate change how much more money you collect but it's it's way more to do that because if let's say you're a residential and you're the thousand kilowatt hours average about 1019 and yes there are plenty of users who are well above that i get that but your average though is 1019. that one cent is a tenth of that number added to your bill. So it's over $10. So if I added $2 over here versus a penny over there, it's a big difference. And the demand rate, since we haven't talked about it very much other than it existed, apologize, the reason you'd really have a demand rate, the reason it was created in the first place you own the transformer that's out on the pole. They cost money to replace. So the whole idea originally for the demand rate was to collect over time the money to go into replacing that every about five years. In fact, I probably have a tool I need to run on this one. So that's typically originally why that existed. so it doesn't make sense in say industrial or in primary because the customer owns their own equipment right so we charge it anyway because it's the only way to really get that increased cost that the increased demand actually puts on the system and on your provider and so that's why it's still there it wasn't originally why it was there but And that is an in-between because you have multiple KVA out of the firmware in your pad mount. So it's not just a $2 increase. It's a two times whatever that is. So a 25 KVA or up to a thousand. So that's quite a bit of money. So that's a different scale altogether. So that's how those work. So that's how it looks like to the customer. In the cost of service also for, I believe we've three-year I also did charts that show what your usage is and then what your bill changes by for the proposed change in rates I don't have that with me I apologize so but that was there and I can send that to me this residential plan three-year plan is

the least impactful. Like we were seeing a 12% increase in year one to residential, which we all know what the end result of that would have been. We would have had a lot of upset residents.

So we backed off to a 6% originally.

In the report, it came with the COS. So it's six, five, and somewhere just under four on the three-year, and it's dropped more than that on the four-year. But the beginning point was still between 5.6% and 6%, because if you do any improvements, your reserves were already getting low, and now they're even lower. So now I'm kind of pushing towards 6% at least. This is a 5%. This was because of the numbers that you had in your accounting sheet that you had. So I wanted to adjust something that was close to what you were thinking. That's what this was originally. And I kept it flat because in three years, it does come back to flat and normal. But that 1st year is slight as I that's palatable to our residents, but it is friendly. So it's kind of that in between. So I'm trying to find that balance, right? That's what you always do in the rates. You're trying to find where can those utilities survive. And your residents be happy at the same time and it's. it's not entirely possible so but you'd have to do three years to make this work you can't just do year one yeah absolutely if you don't follow that on through we'll be back where we were when it started which is not worse that's what happened with the last plan you weren't into as bad a shape probably as you thought because you you're in worse shape when I started to see the list and you weren't the beginning of the last one I've worked for cities who not

Okay, reach for you some years and one guy, it was 12% of any back down because the fun wasn't healthy and that's a tough discussion to have a reason for you to be a reader on.

Just step it up while we have or even they're sorry, or sometimes they're looked at on an annual basis. But the collective of the board is to not make any changes.

And the bad news is over the last 6, 7 years, we've had up to 7 and 8% inflation rates. Now, it's not that bad right now, and hopefully we'll continue to improve, but it can go the other way. But that means that people who were behind 12% just two, three years ago are behind 20s, 21, 24, 26%. And you guys weren't far off of that on residential.

Well, you were good at 12.4. You weren't doing as bad as you could have been. That's why I put that chart in there.

What if you went back to your old rate split for commercial and the new residential? Does that work? How do we know if it works for you? And let me help you understand why I'm thinking this. So what I saw that was so beneficial to splitting the commercial rate was that small commercials rate decrease significantly and large commercial increase, but not, it was still an increase, but this is, this is like almost completely balanced except for there's a demand charge. So I think we need to talk about those two options that are on the table. So the rate split before, what residents are paying right now is $42.89 base for commercial and 0.1303 for energy charge for commercial. So the original proposal was dropped from $42 to $27 and 0.13 to 0.125. So a minimal drop in energy charge, but a big drop in base rate for small. And then large commercial went from 42.89 to 46, added the demand charge and went from the 0.13 to 0.11 kilowatt hours. So it decreased your usage charge but added a demand and increased the base charge.

Does that give us where we need to be in comparison to this one that you showed us today, or better or worse? I don't know.

I'll have to put it in real quick.

And maybe I'm wrong, but my gut is telling me that the original plan was a lot more attractive to small commercial which is our problem. We're having this entire discussion because small commercial was concerned about their rate.

Are you looking at the three or four?

I'm neither. I'm looking at the split between small and commercial from the rate study, which wasn't included in the three or four when it split into two, right?

So is your plan to put the three together?

Well, I don't, I haven't got that far. I'm just trying to figure out the small commercial, large commercial hiccup that is glaring at me right now. I don't, I'm not sure on the three year or four year yet, but this, I think we have a decision right in front of us between the original split commercial and the new split commercial, because the new split commercial Yes, it's more for, it looks less to our rate payers. It is a decrease, but it's not the big decrease that was originally proposed.

While David is working on that, in the five-year plan that we had worked on on the spreadsheet, we had figured that out in five that David said he was thinking 6%. And I'm assuming that probably would get it worked out at four years with the split arm shape. And he's kind of nodding his head there.

Yeah, the 5% was too small for the first year. It needs to be slightly higher. So the 6% for the first year should turn out, but we'll have to run it. It's closer to what I had originally. So instead of these, it'd be 6, 6, 6. Or 6, 5, 5. We can reduce. On residential.

Commercial and 5% residential.

The first year, 5% is a little short, but the commercial is going to help it.

I'll have to run, I'll have to get the file. Unfortunately, I left one file at home.

This page, so this is different because this page has the same numbers, but it says year one short $450,000. And then on this 1 year, 1 shows 630,000, which is right.

And so we're giving you a chance. This is same numbers. But you're in my border juice.

By a couple of 100,000. I like all the best.

Yeah, so when I 1st ran it.

One of the numbers I ran with my original data and then when I put in your improvements, I didn't get them all changed.

Not questioning which one which. I think the colored one is the newest. So the one in that is the newest. I'm good by that. One is updated.

So that's even, that's a, that's an increase of 600.

Can you go to this side, Leslie? The one with the dark blue tables?

so yeah and the other thing is i was running the whole suite together versus just looking at what residential short so and now it's been five hours six hours too which is awful but i gotta find this okay

But generally speaking, he can flush out the, I mean, what, what day did we meet last week that I asked you to do all this like Thursday or something?

I don't know. It was a holiday weekend. I only worked my 15-minute breaks and then an hour extra after work, so a couple times.

But the gist here, I think, is that we can get, instead of the three-year plan, instead of the four-year plan, we can get one that's a little bit more stable from year one to year two to year three, and it's not a huge jump in year one, is what I'm getting from what you've proposed as your new new proposal.

Are you saying this gets us that with a little adjustment? Yes. Yes.

Yeah, because the original three year plan and four year plan were both major jumps in year one. and then carries out that higher rate. So it's more of a shock to our residents. This is a little bit more stabilized across the multi years. We take a hit in the beginning, but it lets them slowly step that up and it lets us catch up and we, it'll take us longer to get to our goals, but it's the more appealing to our residents and softer launch right more flat too we're not going to be able to pay for it we're still not in the hall is what it looks like but again it's not in the whole it's not literally a deficit it's a short of a goal yes 650k short of what we um our goal would be to save that year which is not necessarily to save, it's actually to spend on capital improvements. Because the other thing is that we talked about once we hit our reserve target, then whatever we add, we need to be spending, whatever we add, we need to be spending. So we're trying to get to, this is our target of what we want to add and spend beyond our immediate, the 5 million or whatever. But the sooner we get to that, the sooner we can make capital improvements into our system. But if we need to give it three to four years before we can really start to add and replenish our savings and our reserves, then maybe that's something we have to do. But our reserves are down, period. They are down right now.

What time?

Are you asking me?

You said we're $668,000 short at the end of the year.

The fiscal year?

Yeah. I can't predict it closer than that. The first year.

Oh, yeah. Yeah. But again, it's really $400,000 added to reserves because our target is $1,650,000 short off of that $1,000,000. It's the difference is what we would add to reserves. So we'd still be adding, just not very much. When we're, our target for reserves is 5 million. We are at 2.8, a half a million dollars added to our reserves is not great. But isn't that 650 just for residential?

Yes.

So I think we just need a consensus on what we are wanting. Are we wanting them more flat? Are we wanting more so the three year from the original plan, the four year from the original plan? Or are we wanting the original split commercial? Are we running the new split commercial? Where are we feeling? Not the exact numbers, but what generally, how are we wanting this to impact our residents over? Do we want to try to reach our goals in two years, three years, four years? Do we want it to be more flat and stabilized? Are we okay with the jump at the beginning? Those are the kind of questions I think we need to be discussing. And then he'll take that information and be like, this is what you guys are wanting.

I like to be kind of flatter. So his first proposal, I would say, helps the small commercial work. So if it doesn't create those if we're still in reach have the same goal with with what he's proposing doesn't cause any less. I like to flatten out and watch people residential. Give a break to the small commercial I think that's good. I agree.

Did you hear that? He said 6% year one, five and five. And he would still need to vet that. Yes. But a more flat.

So what, from what I remember, big both years ago when we quit generating our power. The Marshall downtown was had more of the downtown. So the rates, the higher rates that put on them and the residential the flow. Now, the downtown is robust as opposed.

So someone wants to be the person who tells the residential, hey, you have to pick us up.

But as you said, we have to lower commercial rent. This was my pretender.

But we can change it to find it easily.

However you did that, this is livable.

So you're going to use the low idea. So that's what it is.

And again, it's a short of the million, or is it short?

Is it a deficit? What's the short of them? Okay. It's not. So this would work. I want to hear presidential. Small small. What do I say?

So I guess my opinion would be my concern is the reserves. My concern is the infrastructure. So personally, I don't think anyone wants any utilities raised at all. But I think that has to be forefront of this place of how we're going to get and maintain. And whatever we need to do to get there now.

Okay.

So, how to put that into consensus. All right.

That'd be a 3 years. That's the 3 years specifically. I kind of agree with, I mean, obviously, I think we're all agree. It's split on a commercial. It's the direction we want to go. I think we are faced with a tough decision and as people who ran for an older woman, to kick in the can or lengthen the amount of time that it takes us to get to where we want to be is the smart city. They should do that sooner rather than later. So if we're talking timelines, I'd need three year over five year.

So I can propose if we all get to an agreement, the three year and the split, um and we go for the bare minimum on the reserve for the first year should be around six percent i guess i think we just saw we can get close then i can provide final recommendation rates i'd love to only be one right i've got like 50 in here that i've looked at so i'm starting to get more lost than you are um I can provide that I can provide a bill change. She, like, we had the we talked about and. Final analysis and for all 3 years, that'll take me a little bit of work. But I can do that next week. Oh, you're going to pay me this time.

Dang it. We're out of money. ECA recommendations as well.

An ordinance. An ordinance to go with that.

An ordinance to go with all of it, please. Extra ordinances, please.

Yes. On the ECA, we're not going to wholesale redesign that. We're going to stay with the plan we're at now.

We haven't had that conversation.

I know.

I'm asking. They don't know. You can propose it. Okay.

Or I'll think about it. I'll sleep on that. I can do all that by mid next week. You'll miss the next council meeting, but the one after that, you should have it all in the end. and i'll try to by mid next week so that would be the next one after um and that would give shauna and kathy time to look and see and maybe bounce it off whoever you need to and see if there's any fine adjustment from there and then we can have that as a package with your ordinance and uh

yeah that would be awesome actually so are we all on the same page about the original split yes that's what we're all saying make sure the more drastic drop for small commercials yeah i just had a golden glass oh there it is so 42 to 27 and 0.13 to 0.125 versus large commercial would increase 42.89 to 46. The usage rate would go down from 0.13 to 0.11, but they added demand charge, which the demand charge can be pretty impactful. But either proposal has the demand charge.

On that one, I was proposing $10.

It just has a smaller base rate, which is not, we don't have that many industrial customers, so a $6 base rate for our large, 23 large commercial is not going to make us whole. And their eyes will see that, but they're bills will not.

Yeah. Yeah.

On residential, are we staying flat or do you want to do inverted? In other words, increasing for the block size of about 600 kilowatt hours and then 1,500 kilowatt hours?

Sounds scary. Sounds scary. I mean, that's a great program.

A positive way to look at that is you type in as a rate payer to take control a little bit more.

So your question you need to find out is your billing program, what they're going to do to you to get that program.

they'll have an answer they'll have an answer they will i'll do both i'll make one for each and then it'll just they'll have an answer but it'll be at least a two-hour tech call Actually, it's two hours now. The early ones are seamless the last time.

And then, so primary and industrial, the original three-year plan, I've got to find it in the right study here. It's not up there, right?

Yeah. Can you go back a slide?

Oh, it is up there.

I just want to see this.

So originally we were saying is that 13.2% of the far end after industrial? Oh, yeah, I almost got it. Yeah.

Now, 15 new glasses. So 15.2. So that's pretty aggressive. What's in here? That's the important thing is probably that it's very aggressive. I don't have the other chart, but it's $64.

And then $10 demand, and then 0.1306 is what I had.

So our current rate was 0.0318, and $7.20 for the connection in 288.

That's got to be different, sorry.

So the base rate actually goes down for industrial. 56.8 to 64 is what I had. but the energy charge per kilowatt hour goes up by three, four cents.

I show you have 18 at the time of the study. That doesn't mean that's what you have now.

Hopefully more.

Well, that's going to be like Ritchie Brothers, IAA, like there's a bunch.

It's like five or six.

yeah i haven't seen what determines if they're industrial or not being new that's separated is there going to be commercial or industrial so you in our ordinance you have to apply for that you have to we we just a certain thing and can you apply for it as our

Anyway, the industrial is a 15.2% increase because the usage rate goes up 4 cents and it adds demand.

So that's a pretty big jump for industrial. And then primary readers again. Yeah, we only have 1, so it's like.

And the crossover for that rate for. Crossing over the cost of service, they're below until they hit 50 kilowatts. For me, that's what the chain. It's much worse before.

Is that primary major or industrial?

That's industrial. Currently, they never reach their cost of service.

And 50% load factor on an industrial customer is probably bare minimum. They're going to be, yeah.

They're probably in the 70s. Yeah. Maybe one or two in the 80%. Okay.

Just so we're all clear, though, I want you guys to know that that is a 15.2% increase to industrial. I'm going to repeat it one more time. Yeah. I don't know if you know that.

Are we even going to have a plastic service or is it something else?

Well, he has, I don't know what that is exactly up there, but it's not a 15.2% increase is reaching total cost of service, which I would split that over 3 to 4 years.

So divide by at least 3.

so you would yeah okay in the cost of service study is everything based charging there's demand and energy it's 14.9 so you would step that up okay yeah okay yeah so it's the first year would probably be five percent on them for real we've got six on the residential

Do you have enough information? I have. I think it's actually focused, too.

We really do need to talk about the ECA, though. One reason why we're doing this is because commercial, small commercial was concerned with their rate and what they were paying. The other reason was because the ECA was continuously climbing and climbing and climbing and climbing and getting to the point where residents were calling nonstop like, what is going on with this ECA? So there's a lot of confusion with our residents right now because all the hubbub that happened with the ECA and creating a new ordinance and everything in their eyes, they're like, you guys supposedly fixed it, but my ECA rate is still crazy. Why is it still so high? So we really, really pretty urgently need to get to a point where we can lower that ECA rate to where it should be. The problem is you have to do that with a rate change. So the faster we could do this, the faster that comes back down. But our, our rate payers right now,

think we fixed the eca rate and we didn't when we did but we technically did we fixed something else yes not how much it's collecting yeah correct correct yes currently your base rate on it is too low

compared to the average cost coming out of that QA. So the adjustment is large.

Which is an easy fix. We can fix that. But my question to you all is whether or not we should switch gears on the ECA. Other places, we talked about this at the very beginning when we gave our first ECA presentation, other cities call it other things. And so one of the things that's very difficult for staff to do is to explain what the eca is because it's an energy cost adjustment so we can't just say it's an energy cost adjustment we have to say it's an energy cost adjustment because the city purchases power and that power that's purchased fluctuates on a monthly basis so the eca is to help the city stay whole so we have to give this full-blown explanation which not saying that changing this would change that but I personally think if it was called a purchase power adjustment, you're adjusting because of the cost of purchase power. It makes more sense. That's what a lot of other places are calling it. Right. Well, and it's also explained in our ordinance as a fuel cost adjustment. So we don't call it, we call it an energy cost adjustment, but it's actually a fuel cost adjustment. So then I have staff trying to explain the cost of fuel and how that impacts purchase power. That's very difficult, very challenging. It's, I can barely do it. So.

It's one step worse than that, but this is one of those times when I'm actually going to speak up. I usually don't, but. The crazy thing, you want transparency. I'm sure we all want transparency. That's the whole point of a lot of the things that you do. So the energy cost adjustment isn't really fully defining what it is. It is more than that. is cost that MPUA whatever they may be probably transmission related or one of the people in the pool some investment that they're making in the power generation improvements out there somewhere those are all going in there it's not just about the end up and down and the ordinance and the methodology points fairly clearly that this is a purchased power adjustment because it's everything that we're paying when we purchase power

But we call it a fuel cost adjustment. Not just energy or fuel.

That's just a portion of the thing. So that was really why I proposed that early on.

So what are your thoughts?

Sure. So I read the calculation method in St. Joseph's Colossus. You're not suggesting going away from that, but just better defining it. Yes. Naming it correctly and describing what it's actually.

Correct. There's also a possible desire to put back in and averaging to smooth it out again, although that does reduce your current.

And it's a minimum. You told me that it's a minimal fluctuation. So our original calculation did a 12 month rolling average. which everyone's telling me that it's not even noticeable taking out the 12 month. Even BHMG said that it shouldn't make a difference. But in my opinion, it is, but we don't have enough data yet to know that.

Because then you're taking all of that variance Without you know I think that's and I think that's part of the problem we have right now is because we had winter storm hilda or whatever it was. That we had to split out right, but if you were asked to choose again, so I think that says that start yeah so on a normal average usage for us paid it wouldn't make a difference, but any major event. Yeah, it will make a difference.

Well, and there's just the fact that a three month average versus a six month average are going to get you two different things. But I think we need to focus on because of what our residents have experienced as far. I feel like we need to make sure that it is smooth, as smooth as possible, that they're not going to see major jumps and peaks and valleys in the ECA. Well, I'll be honest, it's a little bit of confusion on my part of understanding what each portion goes to, because I think that's what from talking to BHMG, like the 12 month average and the three month average, we're doing very totally different things. We took out the 12 month average and left the three month average. So for me to be able to see what that impact is actually doing is a little bit challenging for me.

like seasonal fluctuations in purchase power versus if you have a major reform.

Yeah. A three-month is still going to feel the seasons.

If I could ask you a quick question. When you figure your cost of service and project it out two or three or five years, did you consider the increase in the cost of purchase power

Yeah, actually, yeah, we increased that. I believe I increased it at a 5% rate on the purchase power cost.

So the energy cost adjustment, since you've increased the cost in your projections, that energy cost base that stays back here two, three, four years prior, we've increased the rates to cover that cost Isn't that inappropriate to keep that base at a lower amount?

So it depends on how much you want to do by adjustment and how much you want to do by rates. You have an option. Now, see, a lot of other towns, we had this discussion back at the beginning of the ECA discussion. A lot of towns put their million a year, they collect it on their ECA. Obviously, we can't do that here.

We have failed that.

And basically, we're bringing in additional funds.

Yes. Correct. So your only option to get to your required revenue is in your rates. So we need to minimize your ECA adjustment as much as possible for at least the next two to three years. You don't really have a choice.

We got locked into that.

So if you assumed like a 3% increase in cost, And you did not intend to create additional margin. You would increase your ECA base by 3%.

Well, you would let it increase on its own 3% ahead. So you wouldn't have to adjust it soon. That's how that usually goes.

There was a similar clause in our ordinances about increasing the ECA base.

It was a description, not of that, but of using it to adjust the rates in some interest.

Are you talking about the 0.888 to 0.802? That was planned for because they knew there was going to be a rate change from the power pool.

Correct.

So they were anticipating the shift from NPUA and Midwest Power Pool or Southwest Power Pool in advance.

This time, yeah, well...

It did. Yeah, we knew it was coming.

And we know this time there's a 7% increase in wheeling charge that you're paying already. 19.

It was 19%, wasn't it?

Well, 7 of it was the wheeling. Wow.

In our discussion, there's someone bringing a call to your safety.

What?

Next meeting is Monday, June 9, 2016 at 6 p.m. Meeting over. Now it's time for Alderman to request new items at the next meeting. Members of the Board of Aldermen have the opportunity to propose items for consideration to be added to the agenda for the next regularly scheduled meeting. A vote will be held to determine whether to include an item on the agenda. Therefore, debate and discussion should be limited to determining the Board's interest in further discussion at the upcoming Board of Aldermen meeting, if one would like to. and something to the next agenda.

So you have PCA. I emailed Kathy a couple weeks ago that seemed like an outlist exchange that would mark a lot of requests for the refunds. We have received 640 applications. Some of those were duplicate applications. So everything we've received through May 20th will be adjusted on this month's bill but my thought is that 90 days coming up at the end of june correct to extend that so it seems like there are a lot so the question is does the board want to discuss extending the agreement at the next meeting or uh discuss it at a future meeting what's the actual

date that it expired i think it's june 28th so do we want to discuss it before it exp extending it before it expires or discuss that if we discuss it we need to discuss it on june 8th i'm just saying if we discuss it it needs to be on the june 8th agenda because

Kathy and I won't be here and we'll have to implement it.

Yes. I'm getting married discussing it at June the 8th.

Uh, you have a motion from suggestion.

I almost feel like if you don't,

put out that you're going to discuss that in June, you may get more people to go ahead and submit by the deadline. We're already seeing an uptick in the last couple of days with City Hall people knowing that the June deadline is coming up and trying to get it in there.

Just devil's advocate.

It might be challenging to put that out.

same point two sides yeah so if we waited till after it closed the first conversation would be july 13th before we could uh vote on it not technically not not literally

But I guess how long do we get to decide? My concern is the waiving. Should you really make a decision to extend it before it's actually expired?

I don't think that the lift on our end to shut it off on the 28th and turn it back on in July, I don't think that will be that difficult. And then Leslie is able to communicate that out. We have multiple ways of communicating that it's been extended or reopened, but it's not a heavy lift for us to turn off the survey and turn the survey back on.

So we're deciding if we discuss it on the 13th of July?

We're deciding if we should discuss it or not.

So we're deciding if we should discuss it at all?

all in favor of discussion at the june the eighth board meeting i need a second first i'm sorry um rachel made a motion i need a second like seconds all in favor of which question of discussing it on june 8th yeah discussing yes We have a motion and a second motion in the second all in favor. Okay. The term. That motion to adjourn. We are adjourned. Good job, everybody.