Thursday, August 21, 2008

From Agent "G"

that Springfield City Utilities & their customers are asking

as it relates to the proposed seven hundred fifty-two million dollar Operating Budget and natural gas rate increase that will be presented to Springfield City Council, for consideration and approval, on September 15, 2008 for a first reading and public comment. The Council will then have a second reading, usually without benefit of any further public comment, and vote on the issue September 29, 2008.

Having attended the joint City Utility Board/City Council study session on Tuesday, August 19, 2008, and considering the input of those who spoke, I came away with a different understanding of the proposed rate increase issue and had some questions that needed to be asked and answered; however, City Council members were the only attendees afforded that opportunity.

Apparently, the members of City Council who were there (Doug Burlison was absent due to a migrain) let the opportunity slip away when it came to the most important question that should have been asked, "When it comes to the preliminary draft of this Annual Operating Budget, what is required and what is desired?"

In my household we struggle with that every month when it's time to do our budget. Quite frankly it just comes down to the 'needs' (required) and 'wants' (desired) and determining what needs must be dealt with, i.e. mortgage, utilities, phone, auto insurance, groceries, etc. and what wants must be delayed. With the ongoing rise in food and gas prices, most of the wants continue to be pushed back and delayed.

A simple guideline to follow, that most folks can understand, is: "When your outgo exceeds your income, your upkeep is your downfall." Violation of this principle, and the resultant financial hardships that follow, are clearly seen at the personal level, city of Springfield level, and even at the national and international level as it relates to finances, balanced budgets, and spending.

As I listened to the various speakers it became apparent that some of those who spoke had a real 'need' to have natural gas rates remain the same. Others who spoke in favor of the gas rate hike had personal reasons to 'want' the rate increase passed.

So as not to bore you and to keep this short: Ray Reynaud, former C.U. Chairman of The Board, indicated that the gas rate increase should be passed due to the ever increasing price for natural gas. When I checked the natural gas price yesterday, it was .0784 which is actually lower than what C.U. has had to pay in the past. And, based on the commodity futures price, there will only be a slight increase in natural gas prices through March, 2010; thereafter, the price continues downward through December, 2020. City Utilities merely needs to purchase natural gas on the futures market, rather than the options market, to take advantage of the lower prices.

The next speaker, Gene Malick, is a 70-year old, retired individual who lives on a fixed income. Like most people of moderate means he would like to see the natural gas rate increase denied. With the cost of food, fuel, taxes, insurance, and other 'needs', along with a 5.6% increase in wholesales prices, the negative economy, and City Council's "unwise spending", he wonders where the money is going to come from.

Then, there was Bill Smillie, the newly elected Chairman of the C.U. Cititizen's Advisory Council, owner of Smillie's IGA, and a resident of Springfield. Mr. Smillie, who lives in a total electric home on the upscale east side of Springfield, 'wants' to have the natural gas rate increase passed in the hope that City Utilities would then have the financial resources to extend the natural gas lines on the Eastern Loop to include his residential community.

Different people, different viewpoints. That's what makes this country great. When it comes to the proposed budget and natural gas rate increase City Council members, as well as the Mayor, have a tremendous, dual responsibility; to the citizen's of Springfield and the municipally-owned utility.

Citizen's of Springfield, who are City Utility customers, have a dual respnsibility also. They have the responsibility to themselves and their neighbors to hold City Council accountable for their decisions, and to see to it that City Council sends the proposed 2009 Annual Operating Budget back to the Board of Public Utilities and the staff at Springfield City Utilities, unapproved.

The entire proposed 2009 Annual Operating Budget is predicated on an Operating Plan based on anticipated income from utility rate increases, along with expansion, and approved by the Board of Public Utilities. That is wholly irresponsible. As business leaders, engaged in commerce and entrusted to operate the utility in a responsible manner, they betray the fiduciary trust of the citizens of Springfield by approving an operating plan that can't be achieved based on the utility's current income.

The Board of Public Utilities board members should require a reasonable and responsible operating plan limited to operations, maintenance, capital costs, labor costs, and fuel costs that currently exist, without basing income on anticipated growth. In other words, the 'needs' of the utility customer, related to safe delivery of electricity, natural gas, water, sewer, transportation and communication services. And, to provide those services at a cost that provides for a fair and reasonable profit that sustains the utility.

At this time, due to the economic uncertainty and higher cost of living that we are all experiencing, irrespective of income levels, the 'wants' of a privileged few must go on the back burner.

When the General Manager-CEO, department heads, and staff at Springfield City Utilities develop and present a revised Operating Plan, based on current income levels, modified to deal with current needs, to the Board of Public Utilities and the board approves such plan, then and thereafter, a proposed 2009 Annual Operating Budget should be presented to City Council for their review. Until such time, City Council should continue to 'table' any and all rate proposals and budgets submitted by the Board of Public Utilities for consideration and approval.

"To be" or "Not to Be" responsible and accountable. That's the question that must be truthfully answered by the Board of Public Utilities, City Council, and the customers of Springfield City Utilities. Not, should there be a natural gas rate increase spread over the next three years.

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