Owensboro Municipal Utilities is preparing to overhaul how it delivers electricity, with plans to join a regional power grid and partner with a new long-term energy partner by 2027. OMU leaders say the strategic shift will enhance reliability and flexibility, though it will come with a rate increase in the near future.
General Manager Tim Lyons outlined the transition during Tuesday night’s Owensboro Board of Commissioners meeting, detailing a multi-year strategy that includes short- and long-term agreements with Big Rivers Electric Corporation and NextEra Energy.
After OMU’s current supply contract with Big Rivers ends on December 31, 2026, a transitional agreement will bridge the gap through May 2027. The move will then culminate in OMU officially joining the Midcontinent Independent System Operator (MISO), followed by a long-term power supply contract with NextEra Energy beginning June 2027 and continuing through 2034.
“This puts us in the best position possible moving forward,” Lyons said. “It ensures we have access to the most economical and flexible energy resources available.”
MISO and NextEra to drive long-term power strategy
Lyons said OMU began evaluating options in 2022 with the help of GDS Associates, developing an Integrated Resource Plan (IRP) focused on three key metrics: economics, risk, and flexibility.
According to Jack Hammilton with NextEra, MISO is a not-for-profit, member-based organization that oversees high-voltage power transmission across 15 U.S. states and the Canadian province of Manitoba. He said it facilitates over $33 billion in annual energy transactions and plays a key role in planning the nation’s energy grid of the future.
Lyons said OMU’s move into MISO will allow it to tap into a larger, more diverse portfolio of energy sources, including natural gas, nuclear, solar, wind, hydro, and coal. It will also increase access to renewable energy as demand grows across the country.
To manage the transition, OMU issued a request for proposals in September 2023, seeking bids for capacity and energy supply. The utility ultimately selected NextEra Energy Marketing, a subsidiary of the Fortune 200 company NextEra Energy, as its long-term power provider.
“NextEra gives us direct control over our energy procurement while also providing security, stability, and access to best practices from one of the largest energy providers in the country,” Lyons said.
NextEra will provide service through 2034, with contracts built to allow for growth, new technologies, and renewable initiatives.
Rate increases on the horizon
Although OMU customers currently pay less than they did when the utility was generating its own electricity, Lyons said rising power costs across the nation will soon impact local bills.
OMU’s residential electric rate is currently $0.134 per kilowatt hour. That is projected to increase to about $0.15 in the next 12 months, Lyons said. He added that nearby utilities, such as in Daviess County ($0.181) and Evansville ($0.198), charge significantly more, according to OMU’s rate comparison.
“We know prices are rising, and this will affect our customers,” Lyons said. “But these partnerships allow us to lessen that impact.”
OMU expects to propose a two-step adjustment: an Environmental Cost Adjustment (ECA) this fall, followed by a potential base rate adjustment in spring 2026 based on a cost-of-service study.
Despite anticipated increases, OMU officials said its electric, water, and fiber internet services remain competitively priced. Lyons said the utility’s water rate is among the lowest in the state at $0.048 per cubic foot — only Henderson is lower. He said OMU’s residential fiber internet has increased speed dramatically while holding steady at $49.99 per month.
Infrastructure upgrades backed by outside funding
Lyons also provided an update on major infrastructure investments. OMU has secured more than $8 million in local, state, and federal funds for system upgrades, including:
- $4 million for water-related projects, including the Hillcrest Area Water Pressure Improvement Project and expansion of well fields.
- $1.3 million for Riverport water line upgrades to increase capacity.
- $1 million for an economic development expansion project that includes upsizing water mains.
- $600,000 toward electric reliability improvements in the Poet section.
- $1.7 million for electric transmission tower replacement along the Ohio River, where riverbank erosion threatens existing infrastructure.
“These improvements are about reliability, capacity, and growth,” Lyons said. “And they’re funded in a way that avoids passing costs to our customers.”
Awards and customer satisfaction
OMU continues to be recognized for quality and safety. The utility received the American Water Works Association’s “Large Water Treatment Plant of the Year” and “Large Water Distribution System of the Year” awards. It also earned the American Public Power Association’s RP3 Diamond designation for the third consecutive time and received a Platinum Safety Award.
OMU’s production department has gone four years without a lost-time safety incident, and customer satisfaction remains high. Lyons said. The most recent survey showed a 97% overall satisfaction rating among electric and water customers — the highest in OMU’s recorded history.
“It’s hard to achieve that in any utility business,” Lyons said. “That’s a credit to our 160-plus employees who serve this community with pride every day.”
Looking ahead
Commissioners asked about infrastructure capacity for future industrial development and cybersecurity protections. Lyons said OMU has enough capacity for 20-30 megawatts of growth and retains a facility that could host on-site power generation if a major manufacturer were to locate in Owensboro.
He also said NextEra’s national footprint and MISO’s robust grid planning provide a secure and scalable foundation moving forward.
Commissioner Bob Glenn praised OMU for its transparency and leadership, especially as power markets become more volatile.
“I just don’t want to see what’s happening in Evansville with CenterPoint — those price spikes are brutal,” Glenn said. “I know you and your staff are working to avoid that here.”
Lyons emphasized that OMU’s leadership team will continue to keep the community informed as the transition to MISO and NextEra advances.
“We’ve got a great team, and I believe we’ve added another great partner,” Lyons said. “Our focus is always on delivering the most reliable, affordable service to Owensboro.”
