1 of 5 11/21/2007 1:16 AM

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1 1 of 5 11/21/2007 1:16 AM Wed, Nov 21st, 107 : Today In History Contact Us Site Help Online services: Place an Ad Subscriber Services 6 Home News Sports Records Opinion Community Entertainment Media Features AD Market Archives Jobs Real Estate Autos

2 2 of 5 11/21/2007 1:16 AM Archives Search News Archives Sports Archives Obit Archives Services Accident Reports Advertising Archives Contact Us Place an Ad Online RSS Feeds Buy Sports Photos Subscribe Bill Pay Newspapers in Education DailyJournalOnline.com Archives Farmington voters decide fate of electric utility to a Friend Printable Version Comment Farmington voters decide fate of electric utility Issue is only item on ballot on Tuesday By DOUG SMITH Daily Journal Staff Writer Nov 02, :06:24 CDT FARMINGTON Voters going to the polls in Farmington on Tuesday will decide whether the city council should have the authority to sell the city-owned electric utility. A yes vote would give the council the ability to market and sell the electric service within a period of three years. After that window of opportunity expires, the council would have to ask permission of the residents again if it decides to sell. A no vote Nov. 6 would mean the council could not sell the utility, or at least not without using some other method or vote to gain approval from the citizens. The ballot on Tuesday will ask citizens Shall the city of Farmington, acting through its city council, be authorized to sell all or part of its electric utility? The language goes on to say passage of the issue would authorize, but not compel, the city to sell the utility. Council members voted earlier this year to place the matter on the November ballot. This comes after a few years of unrest over escalating electric costs which the city first failed to pass along to customers, and then raised rates twice within months in late 2005 and early Search the archives Last 30 Days Search Advanced Search Most Commented News Last 30 days Farmington Council bans smoking in restaurants (330) Gleghorn charged with making terrorist threat (59) Coleman tells mayor her behavior was abuse of office (58) Prosecutor charges man with hitting baby (26)» All Most Commented Most Commented Sports Last 30 days Festus pummels Farmington in state-ranked showdown (40) Central ends season on high note (26) Ste. Gen. wins slugfest over Central (20) Knights emerge victorious in tough battle with Raiders (19) Blackcats win first district since 1983 (15)» All Most Commented For almost two decades the city owned and operated its electric service at a sizable profit. Customers inside the city limits paid rates comparable, or less, than electric customers living outside the city and relying on the region s electric provider. But then things changed shortly after The Missouri Congress gave approval to deregulate bulk power sales in the state. Electricity providers both large companies servicing individual residential customers and bulk sale customers, and smaller power generators supplying only private industry interests were suddenly on equal footing when it came to selling bulk power. Top Ads Top Homes Previously companies not selling electricity to individual homeowners could let the market decide pricing the price could be set at whatever the market would bear. But companies providing power to individual homeowners and small business and industry were regulated by the Public Service Commission, and were required to keep power affordable. Those companies could sell power in bulk, but had to do so at a regulated price. With deregulation of bulk sales came sizable increases in power bid estimates when existing contracts with companies like AmerenUE were set to expire. Several cities faced a future of increased power costs, so some turned to forming or joining power purchasing pools. Farmington signed an open-ended contract with the Missouri Public Energy Pool, or MoPEP, along with approximately 30 other cities for the combined purchase of bulk power. More Top Ads... More Top Homes... Real Estate Listings While the city could now buy power cheaper from the pool than from Ameren UE, which had also submitted a bid for a contract for future power purchases, there was still the matter of getting the power from its generation sources to Farmington s infrastructure - the city-owned system of substations and power lines. The city was required to sign an agreement with AmerenUE for transmission fees to move the power from Point A to Point B over Ameren s network of high voltage lines. The contract signed with MoPEP guaranteed the city the ability to purchase power at the best price the pool could find and supply it to its membership. Pool officials would shop around constantly and buy power for a variety of sources, then divide the cost and channel the power to the each member. The cost paid for the power was decided by the best deal the purchasing pool could find. Going into the agreement the price guaranteed initially was seemingly better than what Ameren had listed in its bid proposal. But power costs haven t remained at the levels it was being purchased initially

3 3 of 5 11/21/2007 1:16 AM from the pool. Additionally, the city had failed to pass along cost increases when the price began climbing years ago. Instead the increased cost of power began eating into the sizable profits the utility had once made profits the city used to fund improvements and departments which are not meant to fully fund themselves, such as police and fire protection. With the change in those details, officials began spending down reserves to help sustain operations and continue a good growth pattern for the city. Eventually, in about 2004, it was reported that the city had burned through its once-sizable reserves and was facing the first budget crunch in many years. The decision was made to increase electric rates to offset the already growing cost of power. Some council members called for a nearly 50 percent rate increase. Others balked at the idea, and it was decided to implement two increases over a period of months. While the group was able to pass the two separate rate increases, the second percentage increase drove the results of the first increase even higher. The two cost raises to customers resulted in an increase of nearly 50 percent. In 2006, electric customers living inside the city were paying significantly higher rates than customers living outside the city and relying on Ameren UE for power. A petition was circulated to request a state audit due to some public outcry that the city was still using electric profits to fund other operations, as customers were paying considerably more for electricity than their rural neighbors. Another petition was circulated for an election to recall then mayor Dr. Charles Rorex... in spite of the fact that Rorex had never voted on the electric rate increases. Some city residents blamed him for the direction the city was going. The state audit was eventually completed and the results released. The findings showed the city should not rely on electric rates to fund or shore up other municipal services. In the April election, four new council members were voted into place. A recall election was held and Rorex was removed from office by a majority vote. For the next several months the city operated with an interim mayor. Talk around town and in council meetings turned to the city selling its electric department a service which seemingly could now only be profitable on the backs of customers paying higher rates than their neighbors. By the time former councilwoman Jeannie Roberts was elected mayor this April, and another four new council members were voted in, the idea of selling the utility had gained serious momentum. Under state law, a municipality looking to rid itself of a city-owned utility must first get approval of the citizens. The easiest way to do that is to put the matter on a ballot. There is no definite buyer in place at this time, although talks have been ongoing with AmerenUE. Ameren initiated a feasibility study earlier in the year, but it stalled while the company was dealing with a pay rate increase request to the Public Service Commission. Once the commission ruled on the increase, Ameren started discussing the matter with city officials again. My last communication with Ameren UE was on July 31 about the ordinance being passed to put the (matter) on the ballot. Our last conversation was July 11, City Administrator Greg Beavers said Wednesday. Some council members have gone so far as to commission a preliminary feasibility study by Beavers into the possibility of building an electric generating plant. In recent months it appeared to not be a viable option and the study was discontinued. Some people in favor of keeping the utility have given a myriad of reasons why the city should retain ownership. Those reasons include the ability to retain local control of rates to some degree. They feel it s best for the rates to be set and regulated by the city council, as opposed to the PSC. It s been suggested the city could implement energy audits to help customers with high utility bills find ways to conserve energy. MoPEP has indicated it is partnering with several other groups on the construction of coal-fired power generating plants across the Midwest. Farmington gave a letter of support to MoPEP in regard to a power plant being built in Illinois. The talk is that once that plant and others are completed and on line it could drive power costs down. That savings would then be spread across the pool members. Copyright Daily Journal Online. All rights reserved. Privacy Policy Terms of Use Top of Page Archives Site Map Home Page RSS Feeds Certain portions 2007 Lee Enterprises and the Associated Press. In Memory of Joe Layden.

4 4 of 5 11/21/2007 1:16 AM As mentioned before, a yes vote Nov. 6 will not result in the sale or retention of the city utility, but will instead put that decision in the hands of the current city council or any council in the next three years. A majority no vote would mean the council does not have the ability to sell the electric department or at least not until they go back to the voters for approval. to a Friend Printable Version Comment Reader Comments The comments below are from readers of DailyJournalOnline.com and in no way represent the views of the Daily Journal or Lee Enterprises. Leave your own comment Leave a Comment There is a 200 word limit on your comment. Name: Comments: Comment guidelines All comments will be screened and may take several hours to be posted. Keep comments clear, concise and focused on the topic in the story. Comments exceeding 200 words will not be posted. Refrain from personal attacks, degrading comments or remarks that do not add to a constructive dialogue. Comments implying suspects in crime-related stories are guilty before they have been proven so in a court of law will be deleted. Do not post addresses or links except for pages on dailyjournalonline.com or government Web sites. Comments will not be edited - they will be approved or declined. Comments may be used in the print edition of the newspaper. If you feel a posted comment has violated our guidelines, please contact the blog admin. For further information on the comment guidelines, click here. Current Word Count: 0

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