There’s a very long explanation of the sad plight of the Gallatin Electric Department. This explanation, thoughtfully and carefully prepared by Gallatin City Administrator Lance Rains, can be found in its entirety at www.NorthMissourian.com and also on the Gallatin Police Facebook page.
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The hard reality is that city utility rates must increase because the current rate is not supplying enough revenue to cover Electric Department expenses.
The City of Gallatin is a member of the Missouri Public Utility Alliance, which is the organization that Gallatin purchases energy through, as well as the Missouri Joint Municipal Electric Utility Commission, to supply to the end customer in Gallatin. Gallatin purchases all of the power for its customers through a contractual agreement with MPUA/MJMEUC that was signed in 1981.
Although Gallatin does have four diesel-fired electric generators, it would be impractical and way more expensive to use these generators than to simply purchase power from MPUA/MJMEUC for $100,000-$150,000 per month. If Gallatin were using the generators, the mere cost of the diesel (at $2.50 per gallon) would be over $2 million per month just in fuel costs. These generators haven’t been used to provide power in the past two decades, and the city has been trying without success to sell the engines to other countries for power generation.
$179,000 Gut Punch
In February 2021, the polar vortex that engulfed the Midwest increased Gallatin’s electric bill from a normal monthly billing of around $150,000 up to $327.665.58 … a totally unexpected increase of $179,717.81.
During the polar vortex, power generation became endangered because the infrastructure to produce energy failed. Electric plants had no fuel to make energy, windmills froze in place and solar panels were covered with snow and couldn’t produce any power.
During that time, the City of Gallatin asked the public to conserve energy and the community listened. Gallatin did not have any rolling blackouts and the power grid continued to provide power to our customers.
Then Gallatin got the invoice from MPUA/MJMEUC.
While there is a federal and state investigation for price gouging against the natural gas and coal companies the city still has that debt responsibility to MPUA/MJMEUC. The total extra debt just for February 2021 is $179,717.81.
That amount will have to be paid back to MPUA/MJMEUC in some manner. The council is looking at different options on that payback.
It might not look like it but Gallatin was one of the lucky cities. Rains heard in a few meetings where communities went from a normal invoice of $500,000 to an invoice of $3,500,000.
Electric Department pays ALL
The city council hired a third party electric engineering firm, Toth and Associates, to analyze the power usage of Gallatin. Using this report and in researching the rate adjustment, Administrator Rains found that the Electric Department has been paying for the power usage of the entire municipality, amounting to around $55,000 per year. The city is now making arrangements for each department (water, sewer, general, park and pool) to pay for its own energy usage in the future
Upgrade to save
Another electric engineering firm has been working on a report which will direct Gallatin on how to upgrade an 8-10 block area from a 2400 kV electric system to a 13.2 kV system. This is an upgrade that was originally started in the 1980s, but due to a problem with the contractors, the upgrade was never completed.
The conversion is very important because the 2400 kV system provides less electric current. Higher current means lower voltage drop, fewer losses, and more power-carrying capability. The 2400 kV system is known as the “wild ground” system and is problematic for electricians if they aren’t used to such a system.
The current loss of electricity for the entire system is 12.8% annually. This is energy purchased from MPUA/MJMEUC that is not accounted for by metering.
The budget for Gallatin’s wholesale energy purchases in 2021 is $1,360,000.00. A 12.8% loss of that cost is $174,080. The 2400 conversion should reduce that 12.8% by a minimum of 3-4 percentage points to an acceptable loss amount.
Gallatin is planning to use its own staff to perform most of the work, which will include seven new transformers, some new wire strung, grounding, some pole replacement, and other associated work. Finley Engineering is working on a strategy for the upgrade as well as a cost estimate.
Rains is trying to fit this project into the American Recovery Plan (ARP) or what is commonly known as Round 2 of the COVID-19 Funds. The funding states that the grant funding must be used on infrastructure, defined as water, sewer, and broadband. Electricity isn’t part of the definition at this time but without electricity none of those utilities would operate. The city expects $322,177 from the ARP funding and it will be distributed by the state.
AMI System
Gallatin is also working on the installation of an Advanced Metering Infrastructure System (AMI). This system will allow each meter to communicate with city hall in real time. That communication will include current time meter reading, leak alerts, heat alerts, more accurate readings, online ability to check usage by customer, and an easier way to pay online. That project has a price tag of approximately $370,000.
Once installed, AMI means that city staff will not have to spend 10 days manually reading meters each month. The AMI should also reduce some of the 12.8% unmetered energy loss by finding and correcting some of the wiring issues of the past. The cost for the system will be split three ways since water meters will also be included.
By decreasing exposure between customers and city staff, the AMI will also help avoid a situation where COVID might keep the city from addressing utility problems.
Rains has been working with SEMA/FEMA and the Community Development Block Grant Staff on COVID-19 grant funding options for the AMI.
Summary of efforts
So, what is Gallatin doing to keep the electric rates as low as possible? Below is a summary of the actions the city is taking to keep the electric rate adjustments as low as possible.
- Changing the current billing policy in which all departments will pay for their electric use.
- Installing the AMI system for better meter collection and loss reduction.
- Working on the 2400 system to reduce electrical loss.
- Hiring professional electric engineering firms to utilize their expertise on projects.
- Utilizing as much possible grant funding to reduce the cash amount of the upgrades.
The following rate charts were prepared by Toth & Associates, engineering firm.
Residential Electric Rates
Current Rates Proposed Rates
Cost of Service $10.00 Cost of Service $20.00
Minimum Charge $10.00 Minimum Charge $0.00
0-40 kWh $.25 0-1,000 kWh $.1369
40-100 kWh $.20 Over 1,000 kWh $.1269
100-300 kWh $.15
300-1,000 kWh $.12
Over-1,000 kWh $.115
Commercial Electric Rate A (Small Commercial)
Current Rates Proposed Rates
Cost of Service $20.00 Cost of Service $30.00
Minimum Charge $10.00 Minimum Charge $0.00
0-40 kWh $.25 0-1,000 kWh $.1369
40-100 kWh $.20 Over-1,000 kWh $.1344
100-500 kWh $.15
500-3,000 kWh $.13
3,000-5,000 kWh $.12
Over-5,000 kWh $.11
Commercial Electric Rate B (Large Commercial)
Current Rates Proposed Rates
Cost of Service $20.00 Cost of Service $50.00
Minimum Charge $10.00 Minimum Charge $0.00
0-40 kWh $.25 0-5,000 kWh $.1271
40-100 kWh $.20 Over-5,000 kWh $.1261
100-500 kWh $.15
500-3,000 kWh $.13
3,000-5,000 kWh $.12
Over-5,000 kWh $.11
Special ACCS (Clubs, Churches-Commercial A)
Current Rates Proposed Rates
Cost of Service $15.00 Cost of Service $30.00
All kWh $.115 0-1,000 kWh $.1369
Over-1,000 kWh $.1344
Special ACCS (School-Commercial B)
Current Rates Proposed Rates
Cost of Service $0.00 Cost of Service $50.00
All kWh $.115 0-5,000 kWh $.1271
Over-5,000 kWh $.1261
Security Lighting
100 Watt $6.50 100 Watt $7.10
175 Watt $6.50 175 Watt $7.10
250 Watt $11.00 250 Watt $12.00
400 Watt $11.00 400 Watt $12.00
1500 Watt $28.00 1500 Watt $30.50