Infrastructure

Mascoutah, Ill., Defends Investment in City-Owned Grid

While residents question the wisdom – and cost – of a city-run electric grid, officials say it will increase reliability and pay off in the end.

by Casey Bischel, Kelsey Landis, Belleville News-Democrat / November 20, 2017
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(TNS) –– The electric bill nearly breaks the bank some months for Mascoutah resident Jessica Johnson and her family. She wonders sometimes whether the cost is worth it so the city can own and operate its own electric grid.

But Mascoutah City Manager Cody Hawkins says ownership and participation in an electric cooperative will pay off in the end. And in the coming years, new infrastructure will improve reliability and reduce outages for the fast-growing city that saw an increase from 7,483 people in 2010 to 8,568 in 2017, according to U.S. Census data.

Johnson’s bill for an 1,100 square-foot home is about $200 a month, depending on the season. She says she’s conservative with her power usage, but the bill is still too high to comfortably afford.

“It really is a struggle,” Johnson said.

Some customers think Mascoutah should sell its lines to Ameren so customers could get Ameren rates, but Hawkins says it’s not feasible under a contract city officials signed in 1990 with the Illinois Municipal Electric Agency, a cooperative that sells electricity wholesale to 32 communities.

Because the cooperative uses contracts to secure loans to pay for infrastructure improvements, getting out of the contract before it expires in 2035 could cost “hundreds of millions of dollars,” Hawkins said.

There are two rates on an electric bill, the distribution charge and the purchase charge. The distribution charge is the cost to operate and maintain infrastructure, and the purchase charge is the cost of energy.

These rates vary, depending on the provider and season, but in Mascoutah, they amounted to about 12.9 cents per kilowatt hour, according to a sample bill from September. In the same month, a sample Ameren bill from Belleville shows a rate of 10.3 cents per kWh.

Ameren’s distribution charge for Belleville is 4.5 cents per kWh from October 2017 to May 2018, according to Ameren’s website, but non-summer rates are usually a little higher. Mascoutah’s distribution charge is a fixed 6.6 cents per kWh.

Mascoutah has the option to change the distribution charge rate, but they haven’t done so for at least six years and have no plans to, Hawkins said. A one-penny change amounts to $500,000 in revenue, he said. Funding the electric department costs about $700,000 a year.

Ameren’s purchase charge for Belleville, which is set by a contract, is 5.8 cents per kWh used. In Mascoutah, however, the purchase charge fluctuates depending on what the cooperative pays for wholesale electricity every month. It was 6.1 cents per kWh in November last year, 6.6 cents per kWh in January and 6.3 cents per kWh in February.

In addition, the electric providers charge different fees, which cause bills to vary. For example, Mascoutah and Ameren, along with most power providers, charge a base fee to make revenue more predictable and stable. Mascoutah’s base fee is $9.50 and Ameren’s base fee is about $12. Taxes also add to bills.

Although Ameren’s rates are lower and more stable in the short-term, they could increase in the future, Hawkins said. Mascoutah’s rates are higher and less stable in the short-term but more stable in the long-term. Another perk is that the city has its own local crews to fix outages quickly.

Bills fluctuate more in Mascoutah, but the city offers budget billing for customers so they can pay the same amount each month. That amount changes year-to-year based on usage.

Building a new transmission line

To provide reliable electricity to residents, and to possible future business development, Mascoutah is upgrading its electric infrastructure. It will unfold in two phases.

The first phase involves building a new substation south of Mascoutah and connecting it with an older substation. The second phase consists of building a new power line east of the city to connect with a substation north of town.

Hawkins expects these projects will give Mascoutah more reliability, as well as preparedness for growth along Interstate 64, but to do so, the city will have to negotiate easements with roughly two dozen property owners, and not all of them are pleased with the project.

One of the reasons for the upgrades comes from increasing demand from a growing Shiloh. When the power goes out in Mascoutah, there isn’t enough capacity for the city to switch to the same northern substation used by Shiloh. Ameren allows Mascoutah to switch to the substation only during off-peak demand or during off-season use like fall or spring, when the energy used for heat or air conditioning is not at its highest.

“That kind of has pushed us to create this project,” Hawkins said. “We need to build more reliability into our system.”

Mascoutah is also building more infrastructure because it no longer uses its backup diesel power plant, which was old and technologically unadvanced, because of environmental regulations.

The city must switch to the new substation by December 2018, but first it must connect to the old substation so it can access the existing grid. The new poles are planned to cut across the farmland of Roy and Mary Ann Waller.

Negotiations for an easement across the property have been going on for about a year, Roy Waller said.

The Wallers bought the farm in 1974, and 16 years ago, the family built a new house there. It’s about 300 feet away from where the new poles would go. There are some already there, but the new ones would be bigger, Waller said.

Mascoutah’s electric infrastructure surrounds the Wallers’ land on three sides and dominates the view from their house. In addition to the old poles, the old substation is about 1,000 feet to the west, and the new substation is rising about a half-mile to the east.

Waller, who farms corn and soybeans, hired Tony Gilbreth, a lawyer in Columbia, to assist him in negotiations with the city, but so far, the Wallers have not accepted a bid for their land, city manager Hawkins said.

Gilbreth declined to comment on the negotiations.

The struggle over the land is not the same as eminent domain. Although the Wallers would be forced to give up land for the project, they would still retain ownership of it. Mascoutah would force the Wallers to give it an easement, or rights to use the property.

“This is outside the city limits, so the city of Mascoutah does not have eminent domain power outside of the city. It actually has to go to (the Illinois Commerce Commission), and they can authorize condemnation or authorize us to take the easement,” Hawkins said.

The Wallers are not the only people Mascoutah has to negotiate with.

The second phase of the electric infrastructure plans include construction of a powerline to the east of the city that goes through nearly two dozen other properties.

After the project is done, an electric line will loop around the city, so, if one line goes down, Mascoutah could switch to the other one.

The project is estimated to cost $10 million.

To pay for it, the city is securing a $7 million loan from Citizens Community Bank, and the remaining $3 million will be paid for from reserves in the city’s electric fund, which holds $8.3 million.

Electric rates are not expected to increase to pay for the new infrastructure, the city manager said.

“I don’t think the residents would be very happy with that,” Hawkins said.

©2017 the Belleville News-Democrat (Belleville, Ill.) Distributed by Tribune Content Agency, LLC.