HOISINGTON — In what has been a two year process, it is expected the residents of Hoisington will see another decrease in electrical rates.
“We’re pretty excited about it,” said City Manager Jonathan Mitchell. If the cuts are passed by the council, Hoisington residents would see the decreased rates on the March 1, 2015 bill.
Sawvel and Associates Inc, hired to work with Hoisington Utility Task Force in 2012, recommended to the Hoisington City Council on Monday that city residential rates be reduced to .11506 kWh. The monthly meter charge would remain at $12.50 and the power cost adjustment would be applied. Rural residential customers would pay .01 per kWh more than city residential customers, if passed by the council
The average residential customer will see about $150 decrease annually, depending on usage, according to Sawvel. The current charge is .13301 kWh.
The engineering firm also recommended a decrease for most commercial customers. “The impact on an individual (business) customer varies depending primarily on a customer’s load factor as a result of moving from an energy-only structure to a demand-energy rate structure,” said DeAnn Dotson, Sawvel and Assoc.
For commercial customers, the monthly meter charge would rise from $12.50 to $15. Non-demand customers would see a rate of .11439 kWh. The largest users may see a base rate of .07418 kWh, depending upon their usage. Demand customers would have a fee of $10 per kw. They would also have a power cost adjustment.
The demand load is the highest amount of electricity used during a certain period of time. A business may use a very large load during the day, for example, but taper off in the evening.
Churches will be exempt from demand rate structures because they would see a significant increase in cost, which is typical of churches, Dotson said.
“We looked at individual rates classes and the cost to the city to serve the different groups,” she said, explaining the range in decrease. “Efficient (commercial) customers benefit from having from having a demand charge and energy rate.”
Dotson said that the current rates result in high demand commercial customers subsidizing lower load customer, and that it was time to move to cost of service based on the results of the study.
She said, in fact, a few commercial customers might see a slight increase in rates, depending if they are an efficient user of electricity. In addition, Dotson said those with a demand factor can increase efficiency, thus reducing their costs.
This decrease has not been approved yet by the council.
Hoisington residents have long complained that city rates are higher than surrounding areas, which resulted in the formation of the Hoisington Utility Task Force. In response, in December of 2012, the council voted to reduce rates 1.3 cents per kWh after recommendations from Sawvel.
Dotson said the city is able to make more cuts because debt has been paid off and projects are done.
The firm also presented a financial forecast for five years with revenue and cost of service projections.
The council will discuss the recommendations at the Nov. 24 council meeting.