On May 7, 2018, the City Council approved PO 146981 for $92,400 for Burns & McDonnell to conduct a Cost of Service Rate Study for the IPL. IPL’s current rates are based on a study completed in 2008. That study included annual rate increases through 2013. A subsequent rate study was completed in 2015; however, recommendations from that study were not approved. Therefore, current electric rates are based on conditions that existed ten-years ago.
Additionally, the 2008 study evaluated revenue requirements to obtain financial stability, but did not consider modifying existing rate structures, which were developed long before 2008. Over the last ten years, radical changes have occurred in the electric industry, electric usage patterns, and utility finances. Modernizing our existing electric rates to reflect these changes and to meet industry-wide best practices is critical.
The original Cost of Service Rate Study development has been expanded to incorporate additional scenarios and presentations associated with the various Master Plan options, as well as incorporate changes associated with AMI in the development of the financial model. These additional scenarios and changes were not contemplated or included in the original scope of work.
The cost of the consulting services will be based on time spent at pre-defined hourly rates plus expenses up to a not-to-exceed maximum of $34,000.00. If approved, the new PO total will be $126,400.00.