KANSAS CITY, Mo. — For nearly 18 months, Independence studied the possibility of selling its municipally owned electric utility and putting it to a citywide vote by November 2025.
But after receiving the results of two studies — a cost-benefit analysis and a long-term strategic plan — conducted by DKMT Consulting, the Independence City Council reversed course and will not sell Independence Power and Light after all.
“From our standpoint — especially my standpoint, with a focus on economic development — there is a true benefit to having a publicly owned utility in your pocket,” Independence Assistant City Manager Charlie Dissell said.
Independence Power and Light, or IPL, was established in 1901 and the city’s charter requires a municipally owned electric utility, but the City Council commissioned the independent studies in April 2023 with an eye toward divesting its electric company.
The study found that, in keeping with the requirements of the city charter to operate a nonprofit electric utility, IPL’s break-even model likely prevents any financially windfall from a sale due to outstanding bond debt and contract obligations during the next 25 years.
A sale also would transfer about $5 million in shared costs currently covered by IPL to other city departments, resulting in a net cost if Independence were to sell the utility.
Additionally, if IPL was purchased by an investor-owned, for-profit utility company — like Missouri’s largest electric companies Ameren, Evergy and Liberty Utilities — residential rates would probably go up to drive revenue.
“The outcome of the studies were not all that surprising to me, and I wasn't really concerned about a sale,” Joe Hegendeffer, the director of Independence Power and Light, said.
He was right not to be worried. After reviewing the studies, the Independence City Council voted 7-0 on Sept. 16 not to sell the electric utility.
“There's not a bunch of revenue that would come into the city if you sold then also the residents would be negatively impacted due to rates having to increase to pay for the cost of a sale,” Hegendeffer said.
The decision also comes with the expectation that the city better use IPL as an asset to attract businesses and jobs.
“There is a huge benefit for us with IPL as an economic-development tool,” Dissell said. “I think that's one thing, when you look at how we have used the utility in the past, maybe that's one thing where we've fallen short. We have not done a good job of using the utility as an economic-development incentive.”
IPL retired its last coal power plant in 2020, so to become more competitive, especially in terms of its power-generation costs, and needs to find new efficient and cost-effective avenues of generation to meet the city’s eclectic needs, which is the focus going forward.
“We're always looking for new ways to increase our generation and our output,” Hegendeffer said. “Right now, me and my staff are looking at several different avenues to be able to increase generation. Generation is the key to being able to bring more businesses to Independence, right? We have to be able to provide the power to our customers, our residents and any businesses that come, so absolutely there's generation projects in the pipeline.”
Now that the city is keeping IPL, pivoting to enacting that strategic plan will be key.
“Ultimately, we need to invest in our infrastructure,” Dissell said. “I know that is one thing where we've maybe put a pause on a lot of that investment while we were kind of figuring out what we wanted to do with IPL. IPL is a big company. There's a lot of assets to it, so we need to do our due diligence in making sure that we're reinvesting into it and making sure that it is sustainable into the future.”
—
