BMU remains valuable asset to community
ne of the greatest assets for the city of Sikeston is our municipal utility that has for years provided low-cost energy rates for residential customers and highly attractive low rates for industrial users.
Without the local utility, Sikeston could not boast of an industrial park that currently employs nearly 2,000 residents.
Without the local utility, Sikeston could not boast of the lowest local energy rates in the state and among the very lowest rates in the nation.
But the energy industry has changed substantially since our local plant was constructed in the late 1970s.
In the beginning of our plant's history, the utility bought a coal mine in southern Illinois to assure a steady and dependable - and cheap - supply of coal. And the utility installed a massive scrubber operation to assure that coal was "clean" and friendly to the environment.
When the energy industry changed, our plant switched to western slope coal which provided an even cheaper supply of coal.
Today, the energy industry is undergoing yet additional changes and what once was our ace in the hole, has changed.
Our local plant was constructed not only to supply Sikeston's needs but also to allow our utility to sell excess power on the spot market. That source of revenue was largely used to offset local rates and keep our local electrical supply the lowest in the state.
But federal regulations and the national push for alternative fuels has put enormous pressure on the spot market to sell our excess energy.
In 2014 our local plant sold over $20 million worth of power on the spot market to other utilities and communities. That number alone is why we have been able to keep low rates. Last year the spot market sales were just $8 million.
Given this changing business model, the city council this week is poised to raise utility rates for Sikeston residents.
The national average for utilities is around 13 cents per kilowatt hour. Even with this higher proposed rate here, our rates will still be just 7.4 cents per kilowatt hour.
Now don't get me wrong. No one wants to pay higher utility rates.
In just five years, the bonds that supported the construction of this plant will be paid in full. That will reduce the pressure from the bond holders and provide some much-needed relief in the highly competitive world of providing energy.
But to keep our plant in good financial standing, a rate increase is required. And, depending on the national trend, it may not be the last increase.
We have been blessed in our community with good community leaders along with strong BMU leadership. These leaders have consistently sponsored local projects that have helped our community grow and provided essential jobs for our residents.
The reason for this rate hike is simple. The federal government's past war on coal has had an expensive impact on our plant. And the obsessive push to find "cleaner" forms of energy has put money into alternative fuel projects that have lessened the need for our spot sales.
Those two factors alone have had a dismal impact on coal-fired plants like ours.
When the smoke clears, Sikeston residents will still have the lowest rates in Missouri and among the lowest in the nation.
Yes, rate increases hit all of us. But even with this small hike, no one can compete with our rates and that selling point to industry is what will continue to bring us growth and jobs.