Report suggests overall increase in electric rates

Published 1:34 am Tuesday, January 9, 2007

By Staff
All but one electric rate would increase
By MIKE VOSS, Contributing Editor
An analysis of the City of Washington’s electric service recommends a restructuring of the city’s electric rates by increasing those rates by 3 percent systemwide.
The analysis was received and discussed by the City Council during its meeting Monday. The report also indicates the restructuring would occur in January 2008. The proposed changes would enable the city to increase Washington Electric Utilities’ fund balance, or reserve fund, by about $1.1 million each year for three years.
The council took no action on the report or its recommendations. It plans to further review the report and discuss electric rates at its annual planning session, which has tentatively been set for Feb. 1-2. Any decision about electric rates likely will come after the planning session and as the council begins its budget preparations for the 2007-2008 budget, which begins July 1.
The rate for residential service would increase by 3.6 percent, according to a proposed rates-adjustment summary. Other rate categories would change, too. A decrease of 1.2 percent in the small general services rate is proposed. Other increases include a 1.6 percent jump in the medium general services rate, a 4.7 percent jump in the large general services rate and a 5.4 percent jump in the industrial service rate. The rate for outdoor lighting would increase by 13 percent under the proposal.
Several council members said they would have liked for the report to include more suggestions on how to decrease expenses as a way to bring WEU’s expenses in line with its revenues.
Jennings said the city must look for ways to cut costs not related to buying electricity from its power providers. He said the report did not address cutting operational expenses, how to provide service cheaper and operating Washington Electric Utilities more efficiently.
Councilman Mickey Gahagan said the city also must look at cutting expenses to help the electric fund because warm weather this winter will mean less revenue coming in from power customers because they aren’t using as much power as expected to heat their homes. It makes sense to reduce expenses in conjunction with possibly raising rates next January, he said.
Mayor Judy Meier Jennette said the city does “need to talk about our internal issues” when it comes to better operating the electric fund as a business. She said that discussion should take place during the upcoming planning session.
The study was ordered by the council in October 2006, when it increased 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, which began July 1, 2006, and ends June 30 of this 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.
The report presented to the council Monday shows the shortfall may not be as bad as first expected.
During Monday’s meeting, City Manager James C. Smith said the report indicates the city can anticipate “a substantially reduced deficit this fiscal year” when it comes to the electric fund.
For more coverage of the council’s meeting, see future editions of the Daily News.