WHAT IS
PUBLIC POWER?
Public power, also described as local or hometown power, is found in 49 states and over 2,000 communities in the United States. Public power is not-for-profit electric service that is owned and operated by a community for the purpose of providing safe, reliable, and efficient electric energy for consumers. Public power serves the local needs of its community guided by local values where decisions are made by elected representatives of the consumers.
With ownership of the electric utility in the hands of the community, public power means local control. Decisions about operating policies, rate-setting, service priorities, and community support are all made at the local level. Local control promotes transparency and accountability of the decision making process since public power utilities are held to open records and open meetings laws. Local control recognizes the importance of customer service by providing for direct contact with consumers at multiple levels to answer to consumers about reliability and efficiency matters.
Public power does not have shareholders for whom profit is a primary concern. With no profit motive, public power can offer lower costs and lower rates than nearby investor-owned utilities (IOU’s) and rural electric cooperatives (REC’s). Public power utilities provide in-kind support for community activities and financial support for local government that IOU’S and REC’s would not provide. This kind of support is often not quantified to demonstrate the economic boost public power gives to a community beyond competitive rates.
PUBLIC
POWER
BENEFITS
POOL
CONCEPT
When municipal electric utilities across the state and country began to have concerns about controlling future power costs, many took advantage of state statutes allowing them to organize joint action agencies. Two principal philosophies emerged beginning in the late 1970’s.
One philosophy is “project-based”. It is implemented by an agency effort to bring generation resource opportunities to individual municipal utilities who then carry out their own resource planning, load forecasting, etc., with the goal in mind to decide on whether to participate with others in a given project. Debt considerations are generally part of the individual decision process.
Another philosophy is an aggregate pooling of resources (asset ownership, resource contract entitlements, etc.) to provide power supplies and other services to all members of the agency (Pool). Rates are standardized and approved by the membership along with a member-driven governance structure. With agency-led assistance in planning, forecasting, scheduling and administration, municipal utilities are poised to receive a variety of technical services and off balance sheet benefits.
POOL BENEFITS
Generation Capital Assets
Facilitated by a member-driven governance structure, KPP, and other such Pools across the country, have taken pride in the distinction of owning capital assets benefitting all members. With the realization of a generation resource useful life extending far beyond the term for debt repayment, members have off balance sheet equity in resources that give the future promise of lower cost with the accumulation of that equity. A principal example for KPP is our ownership of just over 10% (62 megawatts) of the highly efficient combined-cycle natural gas generation found in the Dogwood Energy Facility located near Pleasant Hill, MO. This acquisition was carried out by KPP in behalf of all members committing to a long-term power purchase contract. Each individual member owns a proportional share of the plant, not reflected on the city’s balance sheet, but specifically tied to its membership in the Pool. All administration associated with bringing the resource to the market is handled by the KPP Staff.
Transmission Assets
Drawing again on its member-driven governance and decision-making structure, KPP has proven itself uniquely poised to achieve benefits in the transmission of power. Historically speaking, such promised benefits are entirely new to industry participation by municipal electric utilities. The emergence and growth of regional transmission organizations, the implementation of more than 100 reliability standards of the North American Electric Reliability Corporation, and the issuance of Federal Energy Regulatory Commission Orders 890 and 1000 over the past several years have changed everything for public power entities. KPP is now squarely focused on participating in regionally funded transmission projects that will help KPP’s members earn revenue to help offset transmission rate increases and lower energy costs and increase reliability for customers. In June 2016, KPP signed an agreement with GridLiance demonstrating their commitment to work together in advancing transmission projects that would benefit KPP’s members and the SPP region.
Other Value-Added Services
Numerous KPP members have access to other services provided by Staff calculated to assist the utility in remaining competitive, viable and efficient. Such services are briefly described here:
- Identifying a utility’s financial trend indicators.
- Crafting a utility fund balance forecast and planning model.
- Assessing the strength and weaknesses of a utility’s distribution system.
- Providing energy efficiency appliance rebates.
- Providing economic development grants.
- Providing paid membership to industry associations.