On February 20, 2023, the City Council adopted the 2023-24 City of Independence Action Plan.  The action plan outlines six purpose statements. Two of these purpose statements relate to IPL: “A Well Planned City” and “A Financially Sustainable Organization”. Within these goal areas, Section 4.1.j. is as follows: “Determine Long-Term Plan for IPL, Including Additional Generation Resources, Long-Term Plan for Maintaining Capacity, and Facilitating the Retirement of Existing Combustion Turbines”. Section 5.1.f. is as follows: “Research and Evaluate the Governance and Operation of Independence Power & Light (IPL).”   

An alternative to proceeding with the PROENERGY aeroderivative turbine proposal is to initiate an evaluation process to review options relative to the future of IPL.  This evaluation would include benefits of ownership structure(s), deferred investments, rate impact, services/value to overall city priorities and operations, etc. This evaluation process would lead into an expansive, thorough, citywide conversation about the findings of the evaluation. This would include innumerable public presentations and allow for interactive dialogue in which ratepayers would be able to ask questions. This process would conclude with a citywide election to be held no earlier than November 2023 and no later than November 2025, at which time voters would be asked to determine whether the City should retain ownership of the electric utility or pursue privatization. 

Independence Power & Light is at a crossroads, and decisions are needed regarding the future for the publicly owned utility. 

Without any adjustments, IPL cash reserves will drop below its minimum targeted reserve of $25 million by June 2025 and continue a dramatic slide with projected cash reserves dropping to a negative $97 million by June 2032. 
One strategy to assure that revenues have covered expenses has been to defer capital projects including replacing utility poles and other system needs.  The current IPL budget includes $4 million for capital projects; our annual capital costs are closer to $8 million. IPL has undertaken significant efforts to reduce costs including closing the Blue Valley power plant, refinancing outstanding debt to realize interest savings, and repairing 50-year-old-plus combustion turbines to extend their operational life. The number of IPL employees has been reduced from 245 in 2015 to 175 currently.

This is a real moment of reckoning for IPL. And each of these challenges - some time sensitive, others strategic, which all intersect - will require careful discussion and deliberation by the City Council and with the community.

Staff seeks approval to proceed with a competitive selection process to engage a consultant or consultant team to evaluate all options relative to the future of IPL. Council approval for the consultant team would occur at a future meeting following the competitive selection process. This process would occur over the next several months to include a series of public meetings, town hall forums, and question and answer sessions across the community to ensure broad participation and to afford a thorough understanding of the issues by the ratepayers. This process will conclude with a citywide vote to be held no earlier than November 2023 and no later than November 2025, at which time voters would be asked to determine whether the City should retain ownership of the electric utility or pursue privatization.  The timeline will be guided by the amount of time needed to study the issue and to then engage as many ratepayers as possible in a discussion about the findings of the study. This would not be a decision by the City Council; it will be for the ratepayers to determine.

The total cost of this initiative is not yet known. The cost for a consultant team to evaluate all options relative to the future of IPL would become known following the competitive selection process and would be paid out of the Power & Light Fund. However, in keeping with the City's Procurement Policy, the City Council must approve each expenditure in excess of $50,000. Approval of this item will not authorize the expenditure of funds by City staff, but rather instructs staff to initiate the process of identifying subject matter experts for City Council consideration.

The City Council can reasonably expect necessary expenditures associated with the following components of this project:

• Public engagement and communications
• Consultant(s) to study, evaluate and present findings regarding all aspects of both retaining and privatizing the electric utility
• A citywide vote by the registered qualified voters of the City of Independence regarding the future ownership of the electric utility

Staff will present the City Council with the appropriate action items at each juncture in this process for consideration.