MUSCATINE, Iowa — As the recession continues, Muscatine Power and Water, like many Muscatine residents, is feeling the pinch.

The electric utility had nearly

$4 million less in net income during the first half of 2009 than it was budgeted to have.

“We are challenged; there’s no question about that,” Donald Kerker, MPW director of finance and administrative services, told the Board of Water, Electric and Communications Trustees Tuesday evening.

The utility was expected to lose $2.7 million in the first half of 2009, but actually lost $6.6 million due to poor demand. Wholesale energy sales are down about 30 percent and the price for wholesale power is lower than expected, as well. At the same time, local businesses are also using less electricity.

To save money, the utility is putting off several capital improvement projects and not filling several open positions. It is also tapping into its rainy day fund.

“We’re trying to conserve cash and we’re working hard to get through the tough economic times without having to institute a rate increase,” said MPW general manager Sal LoBianco.

The Water Utility’s net income was about $57,000 less than budgeted, while the Communications Utility did about $80,000 better than expected. However, it still lost roughly $700,000.

In other action

- The trustees approved two bids for replacing eight well motor controls with more efficient variable frequency drives. Hupp Electric Motors in Cedar Rapids will supply the eight drives for $246,964, while J.W. Koehler Electric Company in Davenport will install the drives for $84,195. The bids came in more than $150,000 less than estimated.

The utility planned to replace the drives over the next three years. How-ever, funds from the federal American Recovery and Reinvestment Act of 2009 will pay for 20 percent of the $331,159 “green” water project and it is eligible for a special low-interest loan.

- The trustees voted unanimously to approve a coal supply agreement with Arch Coal for 2010 and 2011. MPW agreed to buy 350,000 tons of coal both years. It will pay $11.75 per ton in 2010 and $13.25 per ton in 2011.

MPW is already paying below the market rate for coal contracts being signed for 2010, Ted Barker of Maxeefish, a transportation logistics consulting firm in suburban Washington D.C., told the Trustees.

-  The trustees voted to contract with Iowa Network Services for the next five years for Internet backbone bandwidth for Machlink. MPW will pay $4,690 per month for service of 150 megabits per second. Currently the utility is paying INS $8,564 for 95 megabits per second.