By Staff
City questions fairness of power pricing structure
By MIKE VOSS
Contributing Editor
Now that a rate increase for Washington Electric Utilities customers has been deferred until at least June 30, Washington officials are preparing to take another look at rate structures for all of its power customers.
Some City Council members believe the existing rate structures are not equitable. Mayor Pro Tem Doug Mercer believes there’s a good possibility the city is undercharging some customers in specific rate classes.
The city began looking at the rate structures about a year ago, after a study determined that under a true cost-of-services basis some classes of power customers had been slightly overcharged while others have been slightly undercharged. That study, ordered by the council, was to accomplish the following goals:
The study determined a 3 percent rate increase for residential customers would help the city meet the three goals. The study also determined that the following adjustments would also help meet the goals: a 2 percent rate decrease for small general-service customers; a 1.4 percent rate increase for medium general service customers; a 1.5 percent rate decrease for large general service customers; a 2.1 percent rate decrease for industrial service customers and a 14.9 percent rate increase for outdoor lighting.
In August 2008, WEU increased its retail rates by 1.189 cents per kilowatt hour. The council also increased the retail rate charged to medium general service customers by 1.4 percent. The council also increased the retail rates charged for rental outdoor lighting service and street lighting service by 14.9 percent.
Those increases came after the council and Mayor Judy Meier Jennette, during a meeting in July 2008, discussed finding the most equitable way to distribute the increase in power rates among the various retail-rate classes: residential service, small general service, medium general service, large general service, industrial service and outdoor lighting.
About six months later, the issue has surfaced again.
Mercer said it appears the city may be selling electricity to some customers for less than the city pays for the power.
Mercer added that he has concerns with residential customers providing 54 percent of the revenue from power sales when they are using 47 percent of the power the city buys. Mercer does not believe that’s equitable.
Because most of the revenue for the electric fund is generated by residential customers, the city should shift some of the revenue-generating burden to the other categories of power customers, Mercer said. Doing that could reduce or eliminate the need to increase the rate for residential customers, he added.
Councilman Archie Jennings has similar views. He said it is time for the city to consider a “restructuring of our pricing categories.”
Jennings also said the council and WEU should continue to find ways to cut power-related expenses and be more efficient in providing electricity to its customers. Doing so will help, to some degree, the city avoid increasing rates as long as possible, he said.
Jennings acknowledged the complexity of the issue.