Despite February Freeze, Rates Remain Steady

posted on Wednesday, March 31, 2021 in Board Meeting News

Tuesday evening, the Muscatine Power and Water (MPW) Board of Trustees learned the Utility had a strong financial month despite sustained frigid conditions in February.  

Director of Finance & Administrative Services, Mark Roberts, reported net income was substantially higher than anticipated in the budget for February. MPW’s net income of $2.3 million was $2.9 more than planned. Roberts said, “The cold weather throughout the Central Time Zone dramatically increased wholesale electric prices. With our largest coal unit operating, we were able to contribute more energy to the market than our customers needed. The result: net margins were more than $1 million higher for the five most impactful days in February. That financial benefit comes right back to the community keeping customer electric rates steady.”  

Gage Huston, MPW’s General Manager, praised the efforts of the power plant and system control employees who help ensure we have the power plant running when we needed it the most.  

“Hats off to our generation and system operations staff who worked tirelessly to keep our systems stable as well as allow us to offset the costs of electricity,” shared Huston. “Had it not been for local power generation, our costs would have sky-rocketed during the weather event.” 

Doug White, director of power production and supply, provided the Trustees with a “Powering the Future” update. Currently, generation staff is working closely with The Energy Authority (TEA) to formally solicit proposals from solar developers light blue text powering the future on dark backgroundand pricing options for a solar power generation system.  The RFP is seeking pricing for several options, including solar systems that have battery storage or systems that are ‘battery-ready.’ Those responses are anticipated in early May, which is part of the information MPW needs to determine if it will go forward with a solar project.  

MPW is specifically seeking proposals to install a utility-scale solar farm at MPW’s Grandview Wellfield site. The location is already owned by MPW and is also near an existing substation, factors reducing the total cost to possibly add solar.  It is also accepting proposals for other projects in or around Muscatine.  Staff is collaborating with the City and County to determine what, if any, zoning requirements would be necessary for these projects.  Including solar in the power mix would further diversify MPW’s portfolio and increase renewable energy production to about 13.5% of its total native energy needs.  

The investigation continues on the natural gas-fired combined heat and power (CHP) generating unit. Analysis by MPW staff and Stanley Consultants has narrowed the CHP sizing options down to three ranges – all with the most efficient configuration. 

White shared that CHP projects are encouraged by the Environmental Protection Agency, the Department of Energy, and the Iowa Economic Development Authority due to their efficient use of energy. A project like MPW’s would be somewhat unique and it would continue to set Muscatine as a great example for making the most of the resources we have. 

To learn more about MPW’s Powering the Future initiative, community members are encouraged to visit MPW's Powering the Future webpage. A recent presentation delivered to the Rotary Club of Muscatine can also be viewed on MPW’s cable network (OnDemand – Local OnDemand) and on MPW’s YouTube page.  

The Trustees learned of a new partnership with the Iowa Cable Advertising Network, Inc. (ICAN) for cable advertising and sales efforts. ICAN’s core business is advertising sales, and MPW is already leveraging ICAN’s sales support (CRM, research, materials, peers) and sales management and training.  

The impetus for entering this partnership was equipment used to insert advertisements was the nearing end-of-life. While this beneficial partnership alleviated the need for MPW to invest in the replacement of costly infrastructure, it also offers considerable advantages for MPW’s advertising clients by: 

  • increasing advertising networks from 16 to 24 (new networks include The Big 10 Network, Bravo, FreeForm, Fox Sports 1, Hallmark Channel, MSNBC, NBC Sports Network, The Weather Channel and The Learning Channel);
  • extending advertising reach to other parts of the Iowa;
  • increasing access to market and demographic research which helps clients refine advertising efforts to target audiences and wisely use marketing dollars; and
  • providing robust digital advertising options that offers advertising without boundaries (such as SEO, geo-fencing, organic search, paid search, Facebook, streaming radio).

ICAN will use their relationships and sales strategies to increase regional and national ads on MPW’s system. Further, MPW’s current advertising sales representative, Warren John Schwandke, will continue to serve local businesses with the added benefits of new relationships and resources.  

Headquartered in nearby Marion, IA, ICAN delivers community cable advertising to over 100,000 homes across the Midwest. By partnering with other independent cable providers like MPW, Cedar Falls Utilities, ImOn (Cedar Rapids) and others, local advertisers have access to cost-effective television commercials in high-impact TV programming.  

Work on the Fiber to the Home (FTTH) project is winding down, with the bulk of the remaining work being ‘clean-up.’ Atlantic Engineering Group (AEG) will be finishing inspection, clean-up, and correction work. MPW crews will focus on removing Legacy equipment from the field.  

Director of Customer and Technology Experience, Erika Cox reminded the Trustees that about 30 customers have temporary fiber lines in their yards. MPW will be doing a permanent installation of the fiber lines now that the ground has thawed.  

“We ask customers to be mindful of the fiber lines when doing spring lawn work,” shared Cox. “Call Iowa OneCall (811) for locates before digging and look before you mow. The fiber lines can be coiled up, if needed, until MPW can permanently install them. Crews will sweep the entire community to touch up field conditions such as open pedestals and safely tucking fiber lines away.”  Clean-up work is expected to occur throughout 2021. 

The Trustees approved an overall 5.9% revenue adjustment for video content to be implemented May 1. Over the last several years, annual rate adjustments have been recommended for MPW video services to cover the increasing costs to acquire programming content. 

At the time the 2021 budget was approved, major contract negotiations had not been completed with network affiliates (CBS, ABC, Fox, and NBC stations broadcast out of the Quad Cities) as well as a few national networks groups. When contract negotiations concluded, three of the four affiliate networks came in close to MPW’s budget projections. The fourth, along with a few national networks came in higher than anticipated. Programming rates, overall, increased 10.3%.  

The adjustment reflects programming increases providers charge MPW for content, and typically MPW has passed them on. This year, however, MPW is absorbing a portion of the increased cost to lessen the impact on customers. Huston shared concern for customers watching their budgets. “We understand the financial strain many in our community are facing,” said Huston. “Customers have been ‘tightening their belts’ throughout the pandemic. MPW has been – and will continue – doing the same.” 

Three new channels were added during negotiations to the Basic Tier in February. Only one of the three had a cost associated with it, adding value to all subscribers for minimal costs.  three channels - circle, true crime, court tv

Rates for Internet and phone services, which do not have the same ongoing cost increase pressures as video, will remain the same. 

In other Board business, the Trustees: 

  • Authorized the General Manager to execute the third contract amendment to the agreement for the construction of the Fiber to the Home (FTTH) System with Atlantic Engineering Group, resulting in a reduction in contract costs of $269,510.82.
  • Approved Champlin Solutions PSF for the professional management services from 2021-2023 for the Communications Utility totaling $336,000.
  • Set May 4, 2021 for receipt of bids and May 25, 2021 for a public hearing for Unit 9 Cafeteria Roof Recover Project.
  • Requested the Mayor and City Council designate May 2-8, 2021, as Drinking Water Week in the City of Muscatine.
  • Received and placed on file the 2020 Annual Report

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  4. fiber to the home
  5. lineup change
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  8. solar