There is a line out of the Paul Newman movie “Cool Hand Luke” that goes something like this:
“What we have here is a failure to communicate.”
That quote could be used to explain the lack of communication that we have seen recently between the Kansas City Board of Public Utilities and the Unified Commission. Case in point: the “PILOT” issue.
First I need to explain that the PILOT that you see on your BPU bill has nothing to do with folks who fly airplanes. It stands for “Payment in Lieu of Taxes.”
Private utilities pay a franchise fee for the privilege of doing business in our city. Since the BPU is owned by you and meundefinedand technically a branch of city government–this assessment had to be called something elseundefinedthus PILOT. But the net effect is the same as a franchise feeundefinedit is a tax on the amount of electricity and water you use.
During past years, city officials would jack up the PILOT to avoid increasing property tax. That was not good policy.
The PILOT on my last BPU bill was $27.76 for electric and water usage of $249.73.
Now comes the Unified Government who recently said it would eliminate the PILOTundefinedbut not really. It may not show up as a line item on our BPU bills. However, the BPU would still be required to pay the Unified Government into an “Enterprise Account.”
So that means that the BPU will have to build this Enterprise Account in its rate base. And that was the concern of David Alvey, the BPU president, who said it takes time to do so. In due respect to the Unified Government, it is proposing the change to take place in 2014.
I don’t see our BPU bills decreasing. The PILOT, although an irritant to many ratepayers, could be chump change compared to other potential costs that BPU is facing, particularly in converting from burning coal to natural gas.
Recently the Unified Commission approved the BPU buying into a natural gas source in Cass County. This capital expenditure will mean higher utility rates. All this change comes about to please the Environmental Protection Agency.
Alvey said the federal mandate to stop burning coal in the United States is unreasonable. He said only 3 percent of the coal emissions worldwide come from the United States. The big polluters are China and India; and it appears they will burn more and more coal as their populations expand.
Back to the PILOT issue. Over the years as BPU bills became bigger and bigger because of increased fuel costs, the PILOT also increased, based on a percentage. A fixed amount, to be reviewed at least annually, makes more sense. But ultimately ratepayers would still have to pay for the Enterprise Account.
I would encourage the Unified Government and BPU work together to come up with a reasonable fee to replace the PILOT. And I would hope there would be better lines of communication.
Murrel Bland is the former editor of the Wyandotte West and the Piper Press. He is the executive director of Business West.