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Council to be presented new electric rate structure

If all goes as planned the full Farmington City Council should be asked to vote on a new electric rate structure in coming weeks – a rate plan that would mean a savings for minimal wattage users.

Currently the city operates on a &#8220declining rate” scale. Customers pay considerably more for the first 500 kilowatts of power used per month than for the remainder of power used that same month. Under the proposed plan, residents would pay a flat fee per kilowatt for electric usage.

Committee members met Tuesday afternoon to discuss the possibility of altering the city’s electric rate structure. The goal was to offer some break for users who consistently fall on the low end of power usage within the city-owned utility. The option which won the support of the committee by the end of the meeting was a &#8220flat line” rate system.

Right now residential customers pay an $11.60 monthly customer charge, 11.22 cents per kilowatt for the first 500 kilowatts used per month, and 7.03 cents per kilowatt for each additional used. Council members have repeatedly voted during the summer months to keep rates at the 7.03 cents per kilowatt rate following a decision to do so in the spring of this year. The plan was to watch the electric department profits and costs and keep rates at the lower charge, if possible, on a month-to-month basis.

The proposed new rate plan, according to City Administrator Greg Beavers, calls for residential customers to still pay the $11.60 monthly customer charge, then pay a rate of 8.28 cents per kilowatt for each unit of power used in that billing month. The &#8220first 500”, &#8220summer” and &#8220winter” rates would all be eliminated – with the flat rate being implemented.

So what does that mean to electric customers?

As an example, a customer who used 500 kilowatt in a billing cycle – roughly a month – would see a savings under the new plan of 26.2 percent below what they would pay under the old plan.

A customer using 1,000 kilowatts would see a savings of 9.3 percent. A customer using 1,500 kilowatts would recognize a savings of 1.7 percent. The &#8220break even” point where a customer would not see a savings under the new rate would be anyone using 1,650 kilowatts per month.

The other side of the plan is that anyone using more than 1,650 kilowatts per month will see an increase in their bill under the new rate plan. While the first thought might be that larger electric consumers would be those owning larger homes, the fact is the higher usage customers could also be homeowners living in total electric, less efficient homes.

City records show the average electric customer consumers 1,102 kilowatts per month of power, falling into the range of recognizing some cost savings under the new plan.

Another example shows how electric usage increases among homeowners and renters during the harsh winter months. For instance, in October of 2005 the electric department had 4,380 customers use below 1,500 kilowatts of power, and only 537 use more than 1,500 kilowatts. But in February of 2006, the department showed 3,235 customers using below 1,500 kilowatts, and 1,747 using more than 1,500 kilowatts of power. Under the new plan, the majority of those 1,747 customers would fall somewhere above that 1,650 kilowatt &#8220break even” point and recognize some electric bill increase for that particular month.

Beavers said the majority of the discussion Tuesday evening dealt with the residential rate structure, however there was talk of changes affecting &#8220large commercial” customers as well.

Of the city’s non-residential electric customers, a total of 116 businesses fall under the &#8220large commercial” heading – those who rely heavily on electric power usage. Those customers will likely see an increase in demand charges and reduction in energy charges … resulting in electric bills &#8220approximately equal” to those billed under the old rate system, Beavers said.

Decisions made Tuesday were done in committee, with the results of that meeting to be passed along to the full council for consideration as early as Sept. 25.

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