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Friday, Oct. 31, 2014

PILOT opposed

Sunday, January 12, 2003

As a former manager of the Board of Municipal Utilities, I would like to respond to the City Council's proposal that implements a Payment in Lieu of Taxes (PILOT) on the electric system of the Board of Municipal Utilities.

In the late 1970s, we proposed to the citizens of Sikeston a plan to construct a power plant which would assure us of a power supply into the future and minimize future rate increases. The citizens approved a $250 million revenue bond issue to accomplish this program. So far, we have been able to do what the Utility promised the citizens - stabilize low rates for residential customers, provide incentive rates to attract industry and establish reasonable low rates for commercial customers.

BMU was established in the 1930s for the purpose of providing the best utility services to the citizens at the lowest possible cost. It should be noted that by changing this concept now by providing a source of revenue to the city's general fund. retail rate increases are inevitable.

The BMU presently provides the city's operating services, electric, water and sanitary sewer, to all of the departments of the city at no cost. They install, maintain and operate all street lighting for the city. They provide the installation, maintenance and operation of lighting to all city parks. They provide and maintain operation of all fire hydrants in the city. All of these services amount to approximately $430,000 annually. And for one of the top officials of the city to say, "We want 3 percent of gross electrical revenues and we don't care where it comes from" is not taking a responsible position on this matter. It was suggested that the funds, if approved, could be used to expand the Economics Development Department of the city. He failed to mention the BMU presently funds the Economic Development Department $168,000 annually.

A PILOT is not a legal production cost and cannot be applied to the wholesale power customers: Columbia, Trenton, Fulton, West Plains and Carthage. To apply the 3 percent to spot power sales would make our power cost higher than wholesale market pricing and could have a detrimental affect on our wholesale power sales. Therefore, the 3 percent PILOT would have to be made up from local power sales.

The members of the Board of Municipal Utilities have always responded in a positive way to the City Council's concerns if they were legally and financially able, and will continue to cooperate with the Council. Let's don't kill the goose that laid the golden egg.

Dick Inman