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Utility commissioners weigh rate hike

By Erik Robinson
Published: August 3, 2010, 12:00am

Commissioners with Clark Public Utilities will weigh six rate-increase alternatives on Aug. 10, all in the range of about 5 percent.

Utility staff members delivered another grim financial update for the three-member commission on Tuesday.

A lousy economy and mild weather has depressed demand for electricity, which is forcing the utility to look for ways to offset a projected year-end budget shortfall of almost $17 million on a $388.6 million electric system budget.

Commissioners knew they adopted a tight budget in December, but they decided to hold rates steady in the face of the economic recession.

“We did last year just exactly what we’ve done a lot of years,” Commissioner Byron Hanke said. “If we could see our way clear without a rate increase, we would do it.”

However, without raising rates or dramatically slashing costs, the utility now faces the possibility of failing to meet minimum financial requirements to repay bonds. General Manager Wayne Nelson said the utility has frozen wages, reduced travel and curtailed large capital expenditures.

“We’ve done everything we can do,” Hanke said. “Just in the past three or four weeks, we’ve started winding up on the fact that we needed to do something — and do something quickly.”

Commissioners on Tuesday considered a range of six alternatives, each with a rate increase of about 5 percent on the current rate of 7.65 cents per kilowatt-hour. The rate could be slightly more or less, depending on whether commissioners decide to spend $2.7 million in cash reserves or boost the monthly flat customer charge by $1 or $2.

The current monthly flat charge is $8 a month for residential customers. Customers pay the flat rate, plus the charge per kilowatt-hour.

The utility calculates the typical household burns 1,500 kilowatt-hours a month. At 7.65 cents per kilowatt plus $8, the typical monthly bill amounts to $122.75. A 5 percent increase would boost the average customer’s monthly bill by about $6.14.

The power supply accounts for the bulk of the electric system budget, about 70 percent, with most of the rest going to operations and debt payments. The utility has about 183,000 electric system customers and is staffed by 323 employees.

Commissioners approved a 5 percent increase in January 2009.

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