The City Council in Atlantic met Wednesday night and approved the Fiscal Year 2016 Budget for Atlantic Municipal Utilities (AMU), following a presentation by AMU General Manager Steve Tjepkes. The $17.9-million dollar budget was approved earlier by the AMU Board of Directors, following a public hearing. The City Council’s adoption of the budget was merely a formality, and is an opportunity for the Council to ask questions about how the utility spends its money.

Tjepkes said along with the budget is a proposed three-percent rate increase for both electric and water users, effective Feb. 1st, 2016, for usage beginning in January. He said electric rates are being increased because of expenses associated with the coal powered generating plant in Council Bluffs. He said EPA regulations on the handling and disposal of coal ash will result in an increased cost to AMU of to $2.3-million.

AMU has a 2.5-percent investment in the plant, from which it receives about two-thirds of its power. The costs to run and maintain the plant are shared by three other utilities, including Mid-American Energy, which is an 80-percent share holder. Cedar Falls Utilities and two rural electric cooperatives are the other owner-investors.

Locally, Tjepkes said the utility is in the process of burying many of its overheard power lines in order to reduce the number of power outages related to power lines being down from ice and wind damage, and, they are continuing to work on the installation of “smart” electric meters, which relay real-time two-way communications to AMU on usage and power outages. Tjpekes said overall, the three-percent rate increase will mean about an extra $1.80 per month on their residential electric bill.

Water rates in Atlantic will increase about 70-cents per month to help cover the costs of new lines being installed in the residential area near the Sunnyside Pool, and near.
Councilman Dick Casady asked “What would happen if [AMU] didn’t get the three-percent raise. Tjepkes said the utility issues revenue bonds, which are paid for by revenue from the utility. AMU he said, needs to keep up its cash reserve level in order to maintain its revenue bond rating.

He said there is also a huge risk associated with maintaining the Council Bluffs plant, and funds need to be set aside to purchase electricity from other sources, should the Bluffs plant go down. If AMU didn’t have a cash reserve, Tjpekes said there could be a substantial rate increase in that type of emergency situation. Tjepkes said utilities such as AMU should have an eight-to 10-million dollar cash reserve. Right now, he says they have about five-to six-million dollars.

The last rate increase from AMU came about two-years ago, and about three-increases over the past 10-years, due to environmental improvements at the Council Bluffs generating plant. Tjepkes says Atlantic is still “On the low end” for electric rates, when compared to utilities of similar size.