Results of Independence Power and Light Studies

In accordance with the City Charter, the City of Independence owns its own electric utility, Independence Power and Light (IPL). With roughly 60,000 customers, it is one of the Top Three largest municipal utilities in Missouri. IPL is in the Top 5% largest municipal power utility providers in the nation, and has been recognized by the American Public Power Association with the RP3 designation for demonstrating high proficiency in reliability, safety, workforce development, and system improvement. This puts IPL in the Top 1% of utilities nationwide.

Per the City Charter, IPL is governed by the City council with Public Utility Advisory Board, which provides guidance and recommendations to the City Council. Less than 30% of municipality-owned utilities the size of IPL or larger follow this model.

The City of Independence hired DKMT Consulting to perform two independent studies: a Cost-Benefits analysis and a Strategic Plan for IPL. DMKT presented these findings to the City of Independence during the months of August and September of 2024.

Following DKMT's presentation to the City Council at the August 26th study session, the city council directed the City Manager to put a resolution on the Sept. 16 City Council agenda to rescind the non-ordinance action item from April 2023 calling for a public vote on the sale of IPL by November 2025. This was passed by a vote of 7-0 in the Sept. 16 meeting, essentially taking the sale of IPL off the table.

Details of the IPL Studies

In layman's terms, selling Independence Power and Light would bring the City no immediate funds. But it would cost the City $5 million every year after.

According to DKMT, the benefits of being a municipality-owned utility include: tax-free financing, quicker decision-making, having rates and fees set by community leadership, higher reliability, shared services with other utilities, municipalities, and school districts, and access to wholesale electric markets.

According to DKMT, the costs specific to IPL:

Revenue:
- Through 2049, IPL will generate roughly $2.4 Billion in revenue.
- It will also pay the same amount in obligations.
- IPL is operated as a break-even enterprise, per City Charter. It cannot generate financial surpluses or long-term debt.
Obligations:
- $267 Million in outstanding bonds.
- $433 million in Power Plant Contracts through 2049.
- $500 Million to Wind and Solar fam contracts through 2043.

DKMT said the generation costs are roughly 50% of the overall costs.

Per City Charter, Independence Power and Light (IPL) currently is governed by the City Council. DKMT provided multiple strategic plan recommendations. The top three recommendations are:

A governance structure of an independent, appointed, citizen board of officials (roughly 5 or 7 members in size) to set rates, monitor financials, and make approvals.
More transparency, both from a financial perspective and from a communication perspective.
An integrated resource plan to prepare for future energy generation concerns, especially as the City of Independence continues to look for more economic development opportunities.

Among the other points made by DKMT:

IPL rates have been flat for the last 12 years. IPL's revenue requirements are currently higher than most other Missouri electric utilities, largely due to the generation costs associated with two long-term coal contracts. Other utility rates are expected to climb, which will bring them in line with IPL's rates.
The growth of wind energy within the industry is making coal-generated power comparatively costly.
IPL operations compare favorably to other utilities.
To attract large-scale customers (and future employers), IPL will need to focus on new energy generation. That will be in the form of securing electricity generation from an already-existing supplier, or building a new IPL facility.
IPL's reliability rates "best in peer performance", but the technology infrastructure must be modernized to provide comparable service to its peers and increase efficiency; that includes investing in Advanced Metering Infrastructure (AMI). According to DKMT, at least 70% of utilities nationwide have AMI, and DKMT said AMI is better for safety, awareness, and response times.

DKMT presented its findings to the Public Utilities Advisory Board on Thursday, August 15, 2024. Click here to watch it on the City's YouTube page.

DKMT presented its findings to the City Council during a Study Session on Monday, August 26, 2024. Click here to watch it on the City's YouTube page.

In an additional meeting on Monday, September 10, DKMT delved into further detail with the Mayor and some members of the City Council. Click here to watch it on the City's YouTube page.

DKMT provided multiple reports to the City and City Council.

DKMT IPL Cost Benefit Analysis Report August 6 2024.cleaned.pdf

IPL Cost Benefit Analysis Presentation 8-15-24.pdf

DKMT IPL Strategic Plan Report August 12 2024.cleaned.pdf

IPL Strategic Plan Presentation 8-15-24.pdf

DKMT IPL Final Governance WP August 6 2024.cleaned.pdf

IPL Governance White Paper Presentation 8-15-24.pdf

These documents were also included in the August 26th Study Session agenda. You can see that by clicking here.