The Rolla Municipal Utilities Fourth Quarterly Report presented by Rolla Municipal Utilities General Manager Rodney Bourne, reflected a financially sound year for the municipally owned and operated electric and water utility in Rolla.
The community solar program, one month in, is doing well, and the Board of Public Works made a decision early in the year to pay off a lease purchase that Rolla Municipal Utilities (RMU) had on their transmission and substation assets, which has freed up around $1 million annually in income to RMU, said Bourne.
“This was financially a very good year despite doing all of the rate relief we were doing,” said Bourne during his report to the Rolla City Council on Nov. 19. “This is not our bottom line of the budget, but kind of gives you an idea of how we did.”
Upon completion of the fourth quarter of FY2018 operating revenues for RMU were up $2,378,428 compared to last year as well as operating expenses up $1,217,532 compared to last year.
When combined with miscellaneous income and expenses, RMU experienced a net income of $2,644,487, which is up almost $2 million from last year, and that’s with giving $1.5 million back to RMU’s ratepayers for rate relief, said Bourne.
“We had budgeted $1.4 million in rate relief, and in our FY2018 we actually gave back $1.5 million,” said Bourne.
A couple areas contributed to RMU having their net income up an approximate $1,967,290 compared to the fourth quarter of FY2017. This included the Board of Public Works decided to pay off a lease purchase RMU had on their transmission and substation assets, said Bourne.
“When we did that, that freed up about $1 million annually in income to us because we are not paying on the debt service, so that freed up some money,” said Bourne.
Bourne added that the other area that has helped RMU have a financially sound year is RMU changed the way assets are booked, especially water main assets, that were donated to the city as new developments happen.
“So we didn’t have much activity last year, but we booked about $700,000 worth of new water mains that show up as an income for us, but it’s a non-cash income,” said Bourne.
Bourne further explained that when a new development goes in, such as the St. Marias Tatandra, the developer installs the water main system, and then donates that system to RMU to maintain in gratuity after that, which RMU then books as an asset.
As of Oct. 24, 2018, RMU had 30 metered customers signed up along with additional customers inquiring about RMU’s Solar Communities Missouri program that has fared well the first month in, said Bourne.
So far 156,000 kilowatt-hours have been used annually, which is only about 5 percent of RMU’s allocation. “We have a lot of room to grow that program. And we hope that program will grow over the upcoming months as more people become aware of it,” said Bourne.
Rolla is the only city of the 35 cities in the Missouri Public Energy Pool, where RMU purchases its electrical power for retail distribution, that has initiated the Solar Communities Missouri program.
“Any of the cities can, and we are the only one who has done it. We have about 12 percent of the allocation of the solar resources, but if the other resources don’t get used by the other cities it gives us an opportunity to bring more in,” said Bourne. “We have a long ways to grow.”
The next renewable resource touched on was wind power. Bourne said most of RMU’s wind resources are allocated to RMU’s large commercial customers through a different program RMU started around two years ago.
Locally Brewer Science and the Missouri University of Science and Technology are using the program, and because of the nature of wind power, RMU is targeting a very specific customer that have very specific load factors that could use a lot of that wind power at night especially when “we are generating it,” said Bourne.
And the Renewable Energy Rate has been quite successful, said Bourne. RMU oversubscribed in 2017 in the Missouri Public Energy Pool. Initially Missouri S&T and Brewer Science participated.
“After we finished the first year of commercial operation of the wind farm in Marshall County, Kansas, we realized additional wind power was generated at that site so we went back to the existing customers that were in that, and reallocated that power if they wanted to,” said Bourne.
Currently, Brewer Science is receiving almost 100 percent of their energy from that wind source, and Missouri S&T is now receiving almost 80 percent of their energy from renewable resources,” said Bourne.
Power supply costs are projected to be stable, and if the Grain Belt Express Project keeps moving forward the long-delayed power line project could possibly reduce RMU’s rates on wholesale costs in the next few years, said Bourne.
The Missouri Supreme Court ruled that the Public Service Commission incorrectly denied a Certificate of Need and Necessity for the Grain Belt Express transmission lines. Initially, the Public Service Commission rejected the project but will now need to reconsider.
Other 2018 highlights from RMU included:
“Our money in the bank, we are down $7.25 million over FY2017, and that is because we paid the lease purchase off, which significantly dropped out assets down,” said Bourne. “That was a long discussion about how we would go through that. We are comfortable with where that’s at. We know we are going to grow that significantly back up over the next couple of years as the Ameren Project moves forward.”
RMU is adequately covered for the short period they are going to be down cash-on-hand, and RMU further has borrowing ability if any major event was to surface, said Bourne.
“Good news is that rate relief will continue in FY2019 and the board is interested in possibly, because of paying the lease purchase off and having that debt reduction down, looking at even making these power adjustment costs permanent,” said Bourne.
The water meter replacement and testing program is well underway, and RMU is almost over 80 percent complete in changing out their small water meters.
“We still have some one-inch meters and two-inch meters to go, but we are moving along very well with that program replacing meters and also testing our large meters,” said Bourne.
Another multi-year program that RMU has underway is to eliminate the overhead lines along Kingshighway and some of the other redevelopment projects. Bourne reported that the first few spans of overhead lines on Kingshighway from Rolla Tater Patch to Lucky House Restaurant are no longer in existence.
The overhead lines have been decommissioned, so RMU can move them back either on the new Highway 72 Extension or back behind the building fronts on Kingshighway, said Bourne.
Lastly, RMU received a good value for the sale of transmission assets to Ameren Transmission Company's arm out of Illinois.
“It eliminates our long term debt on those assets, plus it paid us to continue to own and operate our own substation, so it’s very much a win-win for us. It’s a good project for Ameren and a good project for the co-op system around us,” said Bourne.