Independence utility director proposes $5 residential customer-charge increase, schedules 2026 rate study

INDependence — At the Independence City Council study session on Aug. 25, 2025, Joe Hegendefer, director of Independence Power and Light, proposed increasing the residential customer charge on utility bills from $10 to $15 effective Jan. 1, 2026, and said staff will conduct a full cost-of-service and rate study in summer 2026 to inform any additional changes.

Hegendefer said the customer charge covers fixed costs — transformers, lines, equipment and personnel — that do not vary with how many kilowatt hours a household uses. “The customer charge is meant to kinda flatten that out, and then high energy users will pay more of what we call our variable costs,” Hegendefer said.

The utility has maintained an effective customer charge equal to its 2012 rate; Hegendefer noted past outside studies by Burns & McDonnell recommended higher charges ($19.62 in 2019 and $28.69 in 2022). He told the council that the $5 residential increase and a $10 rise for nonresidential classes would generate roughly $3.8 million a year, about a 2.5% increase in IPL revenues.

Staff’s class-specific recommendations presented to the council were: residential from $10 to $15; small and large commercial to $25 and $50, respectively; and industrial classes to $60 and $85 for larger industrial customers. Hegendefer said the proposal is intended to address a gap between projected operating-and-maintenance and capital needs and current revenues and to provide funding for deferred capital projects.

Hegendefer described several capital-improvement needs the extra revenue would support, including replacement of aged distribution poles, pad-mounted and large transformers (some cited as about 50 years old), certain transmission and distribution line upgrades, replacement or upgrade of aging bucket trucks and equipment, and continued tree trimming and reliability work to serve growing residential and commercial development.

The director said staff originally modeled a two-step $5/$5 increase but is now recommending a single $5 increment in calendar 2026 followed by a comprehensive rate study in 2026 to account for industry changes and local development. He said the increase as proposed would raise an average residential bill by about $5 a month (about $60 a year).

Zach, the city manager, told the council he will “visit with the director and formulate the final recommendations” and that he would anticipate presenting a formal proposal to the council in the fall. No formal council vote occurred at the Aug. 25 study session; Hegendefer’s presentation was informational and staff will return with final recommendations.

The council asked for specifics on which CIP projects would be funded first; Hegendefer emphasized reliability projects and the need to invest now rather than continue postponing capital work. He also said some large transformers remain on long backorder, meaning timing of replacements depends on supply availability. No action was taken during the session.