2009 APPA National Conference

Dealing with Customers’ Inability to Pay in Tough Economic Times

June 16, 2009, 1:30 – 2:30 pm

William A. Johnson

KCBPU History

• Established public water utility in 1909

• Formed electric utility in 1912

• First Board of Directors installed in 1929

• In 1970s expanded service area to cover 127.5 square miles

• Unified Government created in April 1997

• Charter ordinance adopted

KCBPU’s Role as a Public Utility

• Maintain Low Electric & Water Rates

• Provide Quality Customer Service

• Support Local Governments

• Assist with Economic Development

• Contribute to Charitable Organizations

• Provide Jobs - Local Living Standards

KCBPU Challenges

• Fewer Revenue Sources

• Inability to Raise Rates

• Changing Environmental Landscape

• Aging Workforce

• Depressed Economic Conditions

• Aging Infrastructure

• Shrinking Population Base

• Electric Customers – 69,336 Meters• Water Customers – 56,809 Meters• Generating Capacity (Gross) – 613 MW • Summer Peak (Aug. 2007) – 529 MW• Substations – 29• Transmission/Distribution Lines – 1402 Miles• Water Production – 45 Million Gals (Avg.) • Water Storage Capacity – 34 Million Gals.

Customer Statistics

Sales (Energy & Water)

Commerical34%

Residential29%

Industrial20%

Other17%

2009 Annual Budget (Revenue)$303,304,711

• Electric – $219,573,493 (72.4%)

• Water – $35,683,670 (11.8%)

• Non-Restricted Reserves – $24,390,869 (8.0%)

• PILOT – $23,647,679 (7.8%)

Local Rate Comparison 1,000 kWh (Summer)

Utility Rate Fuel Rider Dollars/$$

KCBPU

6.60

$0.0310

$93.89

Westar

8.00

$0.0234

$89.45

IPL

9.94

$0.0126

$125.61

KCPL

7.93

$0.0126

$98.34

Population Trends

0

100,000

200,000

300,000

400,000

500,000

600,000

1990 - 2008 Population Trends by State, County, and City

Johnson County 355,054 451,086 534,093

Wyandotte County 161,993 157,882 154,287

Kansas City, Kansas 149,800 146,866 143,801

1990 2000 2008

Socio-Economic Summary

Per Capita Income

• $24,838 (County) -vs.- $34,799 (State)

Unemployment (Feb. 2009)

• 12.6% (County) -vs.- 6.2% (State)Poverty

• 20.2% (County) -vs.- 11.9% (State)Health

• Lowest in the State

Customer Service Statistics

• Walk in Lobby – 400 Customers Daily

• Payment Arrangements – 14,000 Annually

• Calls Answered – 18,000 Calls Monthly

• Delinquent Disconnects – 43,200 Annually

• Theft of Services – 292 Annually

• Returned Checks – 2,756 ($1,446,487)

• Write Offs - $1,783,883 Annually

Economic Impact on Customers Ability to Pay

• Walk in lobby numbers up despite use of Kiosk in 31 locations

• Accounts receivables up 16%

• Energy sales down in all rate classes (3.5%)

• Delinquent Accounts up 5%

• Theft of services up 51%

Environmental Challenges

• Climate Change

• Cap & Trade Programs

• Carbon Tax

• Renewable Energy Standards

KCBPU Energy Portfolio

• Coal – 61.4%

• Gas – 28.5%

• Hydro – 6.5%

• Wind – 3.7%

• Landfill Gas – (Future)%

Impacts of Ozone Programs

• Ozone and BART on existing units will require added revenue

• Three possibilities for responding to Ozone and BART:– Add AQC equipment to existing plants– Build new coal generation and retire older

plants– Add combustion turbines and retire older plant

• Maximize Use of Existing IT Systems• Improve Billing Options• Customer Self Service/Web Design• AMI/Smart Grid System Deployment• Demand Responses• Energy Audits/Weatherization• Promote Energy Efficiency Workshops• Continue to Discuss Environmental Issues

Existing Service Strategies

2009 APPA National Conference

Thank You

Questions?