During the January 15 Pella City Council meeting, the third reading and adoption of an ordinance amending electrical rates was approved by council.
As previously reported in the Pella Chronicle, on October. 23, 2012, the City Council reviewed the Electrical Cost of Service Study performed by Missouri River Energy Services (MRES). The Electrical Cost of Service Study analyzed the cost of serving each of the utility customer classes and recommended an electrical rate structure which was based on the cost to serve our customers. On December 4, 2012, the City Council reviewed a new energy cost adjustment (ECA) formula which accounts for fluctuations in the costs of the City's power supply, fuel for the diesel generating plant, and transmission expenses. After discussion, staff was directed to proceed with amending the electrical rates.
Comparison of Proposed Electrical Rates to Current Electrical Rates
Overall, there will be no increase in revenues received by the City as the proposed electric rates are estimated to provide the same amount of revenue as our existing rates. However, based on the Cost of Service Study, there will be increases and decreases in the respective classes to adjust to the cost to service each class.
Energy Cost Adjustment (ECA)
The ECA is intended, to account for fluctuations in the cost of the City's power supply, fuel for the City's diesel generating plant, and transmission expenses. City staff believes the ECA will be more stable in the future and as a result we are proposing an ECA formula which would require Council approval to increase the ECA above the baseline energy cost of 6.8 cents per kWH as identified in the Cost of Service Study. As a result, any changes desired by Council would be made in November for the upcoming calendar year and would be based on projected energy costs. Listed below is the proposed ECA formula:
A+B/C-$0.068= ECA (Factor to apply to monthly bills.)
A = Annual projected power and transmission costs for the next calendar year.
B = Actual cost of fuel for local generation in excess of $45,000.00 in the previous year.
C = Annual projected kWh. $0.068 = Base Power Cost (Already included in the rate structures).