Council may change electric rate schedule

COLUMBIANA – City Council is preparing to vote on switching back to billing city electric customers by class in order to alleviate subsidizing. The change would also result in City Manager Lance Willard not being responsible for adjusting rates each month.

Customers began being charged the same rates in 2011, when Keith Chamberlin was manager, and he also adjusted rates on a monthly basis based on the cost of power and overhead.

The city purchases its power from American Municipal Power (AMP) and is responsible for distribution. At that time users were paying eight cents per kilowatt hour. That jumped to around 11 cents this year.

When they were lumped together customers were told the rates would be monitored and slowly increased over time to make up for the adjustment.

But a study by Courtney and Associates earlier this year found that commercial and industrial users were subsidizing other users on that rate schedule, and advised council that rates should be changed to reflect cost of service.

The study’s results were presented to council in April and council gave a first reading to legislation enforcing the rate split at this week’s regular meeting. A second reading is required before a vote.

John T. Courtney told council in April the only class providing enough revenue to the city are heavy commercial/industrial users, which at $3.03 million account for roughly 36 percent of all energy sales in the city. Residential accounts for 31 percent, at $2.79 million.

The city is spending $3.34 million to provide the service to heavy commercial/industrial users while bringing in $3.45 million, and spending $3.2 million and $2.5 million on residential and commercial users while only bringing in $3.1 million and $2.4 million.

Under the change before council, commercial non-demand users would pay a monthly service charge of $15 for single phase and $25 for three-phase service, and 10 cents per kilowatt hour used.

Demand service users would also pay $15 and $25 for single and three-phase, but be charged eight cents per kilowatt hour.

Industrial users would pay a $50 a monthly service charge, $15 per kilowatt of billing capacity charge, 50 cent reactive charge and four cents per kilowatt hour used, with discounts available to those owning their own substation.

Residential users would pay a monthly service charge of $5 and 9 cents per kilowatt hour used.

According to the legislation, rates would become effective for electricity distributed during the Sept. 1 billing cycle.

Willard said a large portion of customer bills would remain fixed, although a cost adjustment would be made based on the cost of power.

According to the legislation the base power supply cost included in the new rates schedules is six cents per kilowatt hour used.

Mayor Bryan Blakeman questioned the cost and said that according to Courtney’s presentation a power supply base cost would only be considered in the event that rates changed drastically, or the result of a “drastic project.”

Willard said he would look into it.