Electric-rates report ready for city

Published 1:13 am Sunday, January 7, 2007

By By MIKE VOSS, Contributing Editor
A study of the City of Washington’s electric rates has been completed and is scheduled to be presented to the City Council at its meeting Monday.
The study was ordered by the council in October 2006, when it raised the city’s electric rates by 5.25 percent to avoid a projected $1.6 million shortfall between wholesale power purchased by Washington and revenue from retail power sales in the remainder of the current fiscal year. The increase was made to the wholesale-power-cost-adjustment part of the city’s electric rates.
In January 2006, the city increased electric rates by an average of 8.7 percent. In May 2005, the city increased electric rates by 4.2 percent.
At October’s meeting, the council instructed Keith Hardt, director of Washington Electric Utilities; City Manager James C. Smith and Dwight Davis with Booth and Associates, an electrical engineering consultant hired by the city, to return in 90 days with a report. That report is to contain the cause of the shortfall and a plan for how the city can prevent a similar situation from occurring again.
Councilman Mickey Gahagan, reached by telephone in Atlanta on Friday, said he had not yet seen a copy of the report. Gahagan said he planned to contact City Hall in an effort to obtain a copy of the report before Monday’s meeting.
Gahagan, who was returning to Washington on Friday, said he expects the council to use the report in its effort to find a rate structure that allows the city to provide power as cheaply as possible to consumers but generate enough revenue so the city can pay for the power it purchases from its suppliers. Gahagan also said he wants a rate structure that provides users of the city’s electric system a return on their investment, similar to how investors in a privately owned power provider such as Progress Energy expect returns on their investments in the company.
The report also has another purpose, Gahagan said.
The city is searching for an enterprise-funds manager to oversee financial aspects of its enterprise funds, which it wants operated like businesses.
During the October meeting, city officials said the report could recommend the city overhaul its existing electric-rates schedule.
A memorandum from Hardt to the council and mayor indicates a restructuring of the electric-rates schedule will take place.
Gahagan said people should not automatically assume the restructuring would result in higher electric rates, but he did not rule out that possibility.
At the October 2006 meeting, Smith, Hardt and Davis said several factors appeared to be at least partially responsible for the shortfall. Those factors include, but are not necessarily limited to, using reserve funds to cover deficits between power costs and revenues from power sales, cash-flow problems related to extending the due date for electric bills from 10 days after a meter is read to 15 days, some customers not paying their bills and not charging enough for electricity in previous years.
The council told Hardt, Smith and Davis it wanted the study to determine at least two things. They are as follows:
The report is expected to answer those two questions.