Residents skeptical of council plan to sell Power Dept. to RMP
Daniela Vazquez
Staff writer
12-15-2016
MT. PLEASANT—Mt. Pleasant leadership has been entertaining a proposal to sell its power department to Rocky Mountain Power (RMP) to mitigate the risks of a volatile energy industry and help bear the financial burden of mounting infrastructure problems, but at the recent public hearing on the topic, residents were openly skeptical.
The hearing, which was attended by more than 80 residents, took place at Mt. Pleasant City Hall on Dec. 6, and Mt. Pleasant City Mayor Dave Blackham and a representative from RMP both had presentations for the attending public to help them understand why they thought the proposal deserved some consideration by the residents. Despite the wealth of information presented, residents of the city ultimately stood in opposition to the proposal.
“We have been courting the idea for what to do with our power department, for not only my administration, but even prior to my coming on as the elected official for Mt. Pleasant,” Blackham said. “One might ask as to why this would even be considered…I wanted to make sure the proposal was public so you folks know all of the details and can weigh in.”
The sale of a city’s power department is too large of a decision for a city to legally make by itself. It would require a vote from the city residents to accomplish. Knowing that, Blackham said to the attendees that the reason the city leadership felt this proposal was compelling enough to bring before the public for consideration was two-fold.
Blackham said the principal reason he felt the proposal might have enough merit to consider was the risk of owning a municipal power department, and its investment in numerous power sources, is becoming more volatile every year.
Uncertainties in coal-power due to federal moratoriums and other constantly fluctuating variables in running a city-owned power department have risks, says Blackham. The proposed sale to RMP would remove all of that risk from the city, and its residents, and put it in the hands of a more adaptable, progressive and experienced power company.
The second reason that Blackham said was a factor in this decision was because the city had a mounting debt and aging infrastructure and that the sale of MPP could be a viable option to help remedy that.
He made a presentation that assessed the city’s debt for the residents at the meeting. Then he went on to explain how the costs to repair roads, ensure that there was sufficient culinary water for the residents, and manage other financial obligations was substantial, and a good reason to entertain RMP’s proposal so they could continue improving the aging infrastructure.
say it will cost an additional $7.5 million to complete.
But the city also has its water sources to think about, Blackham said. Problems with contamination of the culinary water springs have left the water needing treatment. There is a plan in place to solve the culinary water situation, said Blackham, but it will require $3.1 million to accomplish.
Blackham also says the city’s irrigation system is in dire need of an overhaul, a project that could cost millions. According to Blackham, thus far, $2.1 million has been spent on fixing various roads, and engineers
These financial obligations and various others have placed the city in a spot where it will require $19.5 million to fulfill their needs, and with RMP’s proposal, Blackham says the city could use that money to fulfill those financial obligations.
“If we did sell to Rocky Mountain, it would wipe out all of our power debt, and leave approximately $5 million left in the bank to use on whatever we need,” Blackham said. “I hope you see why I felt, as your elected representative, why this is so critical to consider. We do have some infrastructure needs. I wish we didn’t, but we do.”
Gary Hoogeveen, senior vice president and chief commercial officer at RMP, made a presentation of his own to the public, to try and dispel the muttering of concerns and worried uncertainty whispering throughout the large cluster of city residents at the meeting.
Hoogeveen says he wants this to be a win-win situation for the residents of Mt. Pleasant. He told them, not only would this proposal help the city out with its financial burdens, but RMP is more suited to keeping up with the renewable energy trends that the country is headed toward and the volatile industry market shifts.
Blackham openly agreed with Hoogeveen, expressing concern that MPP was not in its current state equipped to effectively adapt to the rising rates of solar power users—a factor that Blackham said had the potential to affect power rates for all the city’s residents in the long run.
“We’re preparing ourselves and adapting to the future,” Hoogeveen said. “We also have the financial strength and resources to accept the city’s debt.”
Hoogeveen says the company is willing to pay a total of $8.75 million for MPP over the course of 10 years. He also said, if they had to offer more than that, the new RMP customers in Mt. Pleasant would experience rates rising, and he says he does not want that.
He claims about 60 percent, or more residents will save money with RMP’s rates, over MPP rates, if the city sells.
Some resident attendees were vocal about the proposed payment structure, saying the range of customers who would pay less were based on an unrealistically low power usage of 200-kilowatt hours. Blackham told the Messenger that one caveat to that 60 percent figure Hoogeveen threw out was that some of the Mt. Pleasant households who fall into that 60 percent category are cabins that do not get used year-round so that skews the numbers.
According to Hoogeveen’s data, residential households in the 400-kilowatt hour range would pay roughly the same as they do with MPP, but those over 600-kilowatt hours could pay significantly more.
Hoogeveen insisted that most households will pay the same or less, but there were additional benefits to the sale proposal.
For residential customers, RMP would offer energy efficiency assistance programs and cash incentives to help customers save money, Hoogeveen claimed.
For commercial power users, Hoogeveen claimed commercial rates were going to be significantly lower—as much as $15,000 in savings per month for Mt. Pleasant businesses like Terrell’s and the Sanpete Valley Hospital. He said he believes competitive power rates drive economic development, so RMP’s long-term strategies to keep prices low and competitive had the potential to boost the city economy.
The public voiced concerns voiced about the potential for RMP to raise rates in the future rates, assuaged in part by an explanation that, because they are a large rate-regulated company, RMP can’t just change the rates.
If RMP wanted to raise rates, they would have to apply to the Utah public service commission, the entity that adjusts rates, a process that can take about a year to complete.
Blackham said that another possible benefit of the sale was that RMP did not want the cities hydroelectric plant as part of the deal, so the city could sell its power output to another municipality and earn further income in that manner.
Several members of the attendees voiced concerns to Blackham and the council that they were not willing to give up the hometown service they received from MPP. The residents felt that because the nearest RMP support presence is in Richfield, Santaquin, and American Fork, problems would not be addressed promptly.
Shane Ward, superintendent of MPP, said he thought the offer from RMP should be higher.
“Give us $30 million, and then we will talk about it,” Ward said.
Resident Brooke Allred said, “Manti is in a similar situation as Mt. Pleasant, and yet Manti is doing great with their roads, they’re getting grants. Their pool is a money maker. It puts a huge amount of money back into their general fund. So, have you looked at what Manti might be doing, because they are getting grants left and right. I just don’t see how selling an asset like MPP is a good idea.”
At the end of the meeting, Blackham asked the public in attendance for a show of hands in support or opposition to the moving forward with consideration of the sale proposal. Over 90 percent of the public in attendance voted in opposition to the proposal.
“They [the public] are the ones that get to decide with a decision this big,” Blackham told the Messenger.
