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Residents speak out against proposed BMU rate increase
SIKESTON — A standing room only crowd filled Sikeston City Hall Thursday evening as officials with the Sikeston Board of Municipal Utilities attempted to answer questions about a proposed rate increase.
Last week, Sikeston City Council members were presented with recommendations from the BMU to consider a three-year cumulative rate increase for utilities provided by BMU. It is the latest in significant increases since 2014, the most recent being a 10.9 percent increase implemented in June 2018.
The proposed three-year rate increase averages 8 percent per year for electric and 12 percent for both water and sewer. For the average monthly bill, which according to BMU is $138.37 with $106.92 electric, $17.50 water and $13.95 sewer, the increase will be an average of $12.15 after year one, $14.61 for the second increase and $17.10 after the third increase.
The anticipated dates for the rate increase implementation are October of this year for electric and January 2019 for both water and sewer. At the end of the proposed three-year increase in 2021, Sikeston utility rates will be comparable to the majority of Missouri cities’ rates imposed on their customers in 2016.
While officials referenced many times that Sikeston’s rates would still continue to be some of the lowest in the state, it was of little consolation to many in attendance. Some who spoke cited Sikeston residents who are on a fixed income and their ability to pay for the increases.
Steve Sikes, chairperson of the Salvation Army's Sikeston Service Unit Board, addressed the Council and said one of the things the Salvation Army helps do is help pay bills for those who have had their electricity shut off.
“There is a tremendous amount of people who are living month to month,” Sikes said. “The city needs to figure out some way to help those people because they still have to live. Water and electricity are not just wants, they are basic needs.”
Some who spoke out said the increases could cause people to move or force small businesses to close while detouring businesses from locating in Sikeston.
“You are going to push out the actual working people in this town because they can’t afford it anymore,” said Sikeston resident John Graham.
Graham added that he thought BMU could find other ways besides a significant rate increase to find the money while questioning the business rate increase versus the residential rate increase.
Rick Landers, general manager of BMU, said that the business rate increase would be 16.8 over three years versus a 24 percent rate increase for residential users.
“Why can we not up the business rate a little bit more to not raise (residential users) a complete 8 percent,” asked Sikeston resident Darlene Margrabe.
Sikeston BMU Board member Alan Keenan said BMU didn’t increase rates for over 20 years and when that happens and then a point is reached where rates have to increase, mathematically the rates will be too high.
“That’s where we are,” Keenan said. “The solution that would appease most people here would be if we could come up with a rate increase that was based on people’s income and ability to pay. That’s the common theme. I don’t know how we could do that. Nobody’s figured that out yet. If we could, we would.”
BMU officials were also asked if the increase could be spread out over time so there wouldn’t be such a significant impact.
“That’s a question that’s hard to answer,” said Brian Menz, chairman of the Sikeston BMU Board. “It’s hard to say what’s going to happen next year. We have already, in our humble views, spread it out because we started out four years ago with deferring maintenance, living off reserves, cutting costs and doing everything we could to push these rate increases off.
“How long do you want us to push them off? Do you want us to go into default?”
Officials also tried to answer questions about the purchase of the Bootheel Golf Course and its current lack of use as well as the building of the BMU offices. While many in attendance weren’t part of the decisions to purchase the golf course those who were said it was a bargain at the time and then the downturn hit.
Sikeston Mayor Steve Burch, who wasn’t on the Council at the time of the purchase, said he did know Council halted any development on the property due to the BMU budget crisis.
Joe Blanton, who was a BMU Board member from 1996 until 2006 said it was a different time when he was on the Board.
“Our biggest problem when I was on the Board was trying to make sure the (Council) didn’t raid the BMU war chest,” Blanton said, adding that while not raising rates for 25 years, at one point BMU even cut rates. “(The current Board) has a much different situation.”
Upon being questioned as to if BMU had looked at other ways to cut money, Landers said there had been plenty of cost cutting measures from recent years. He noted that since 1998 they have not replaced 23 employees and that they have reduced coal costs by $2.6 million or 8.5 percent.
Landers said BMU also applied compliance solutions at the plant that saved $22 million over the alternative solution and negotiated an amendment to defer an increase in SPA transmission costs to stage in $600,000 of annual cost increases over five years.
BMU also negotiated a labor contract that lowered health insurance costs 20 percent while minimizing wage increases and reduced plant security staff that lowered costs 40 percent.
Other things BMU did to help lower costs was to reduce maintenance on non-critical items, increased maintenance intervals on some equipment, reduce overtime schedules for employees and vendors, negotiated lower price on materials needed for compliance and ran equipment longer before replacing.
“The challenge that we have before us is the fact that we either find some way of raising the rates or we go into default,” Burch said. “If we go into default, this 9 cent per kilowatt hour would likely be 12 cents or above. I truly don’t like the situation we are in. If anybody could go back and do things over I’m sure they would have had small increases over the years and we would already be at 9 cents. But we can’t.”
Council will vote on the increase at Monday’s regular City Council meeting scheduled for 5 p.m. at Sikeston City Hall.
In other business Thursday, Council:
• Approved a request to rezone property south of Brunt Boulevard and north of US Highway 60 from agriculture to single family residential.
• Approved a proposed subdivision at South Ridge Estates for 16 single-family residences to be built.
• Approved a stop sign to be placed at North Ranney Street and Wakefield Avenue.
• Approved a stop sign to be placed at Glacier and Yellowstone Streets.