Hudson -- Anticipating higher costs in 2015, the city and Council will look at rates for electricity this year.
John Courtney of Courtney and Associates, a public utility consultant, presented a cost of service and electric rate study for Hudson Public Power and made recommendations to the city staff and Council about future electric rate adjustments at the Feb. 25 Council workshop.
Courtney said projected revenues at the current rates would be about $19.7 million but revenue requirements would be $20.5 million in 2014 and 21.8 million in 2015. The revenue requirement is the funds needed to operate the electrical system, he said.
Courtney said one of the reasons for the cost increase in 2015 is because when the price was set in 2012, First Energy announced it was shutting down a coal fire plant, which drove the price up.
In 2016 the revenue would be $20.4 million and cost of services $21.5 million with a shortage of 5.2 percent.
"Revenues at current rates are not sufficient to meet near term (2014-2016) revenue requirements," Courtney said. "Revenues need to be increased overall by approximately 5 percent in order to meet the projected 2016 revenue requirement."
Courtney reviewed the customer charges adopted in 1996 for residential and commercial customers and said the commercial class is slightly subsidizing the residential class.
He recommended rates be increased to meet the projected revenue requirements; develop a large commercial rate; gradually move ED customers to large commercial rate; increase customer charges for all classes; include recovery of kWh tax in rates; and roll current power supply cost adjustment in to base rates.
Director of Public Works Frank Comeriato said with the new meters installed in the past few years, the city can bill demand for electrical power. Peak power costs more to supply.
"Two customers can use the same kWh, and one has peak demand (between 5 and 8 p.m.) but they pay the same amount," Comeriato said. "It's not fair."
Without a higher cost [to customers] for peak demand, there is no incentive to conserve energy, Comeriato said.
Council President Hal DeSaussure said any changes should be in place for 2015 when the costs increase.
Interim City Manager Scott Schroyer said the city would take two months to look at the rates and other factors. Council could discuss it in July and bring legislation forward in August and September.
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