Electricity rates to surge

Electricity rates to surge
When it comes to energy and utilities bills, Vermillion citizens have had to grin and bear it.

There's little residents can do to control the topsy-turvy price of the gasoline they pump in their automobiles, or the spikes in the cost of the natural gas that heats their homes and makes a soothing soak in the tub at the end of a long day possible.

It won't be long before Vermillionites' bank accounts will be victimized by another form of energy: electricity.

The city receives electrical power from two sources – the Western Area Power Administration (WAPA) and Missouri River Energy Services (MRES).

Vermillion must increase the amount its charges consumers for electricity in 2008 because of two factors: higher price tags on the power supplied to city from both WAPA and MRES, and a substantial jump in the cost of capital expenditures for raw materials used by Vermillion Light and Power.

"At this time, the city staff and MRES are proposing to increase electric rates to cover the 2007 WAPA and MRES rate increases, increased capital expenditures due to current substation and distribution system improvements, and future anticipated transmission costs," said Utilities Engineer Harold Holoch.

WAPA, the city's base power supplier, has approved a 6 percent rate increase and MRES, Vermillion's supplemental power supplier, has approved an 8.2 percent rate increase for 2007.

It is estimated that the upcoming 6 percent WAPA increase will cost the city's electric fund approximately $47,000 in 2007. The 8.2 percent MRES rate increase will cost the fund approximately $73,000 next year.

Vermillion also expects to spend approximately $1.6 million on capital expenditures in 2006 and 2007, including a substation transformer. The transformer's total cost exceeded its June 2005 estimate by $340,000, in part because of higher costs for raw materials such as steel, aluminum and copper.

Because of these cost overruns, MRES has suggested that Vermillion increase electric rates by yet another 3 percent in 2007 – a total of $120,000 – to recover a portion of these amounts.

The jump in rates, approved by the city council Dec. 4, should bring in metered sales revenue totaling $4.46 million.

After the 6 percent rate increase becomes effective, a typical Vermillion resident using 700 kilowatt hours per month will pay $3.15 more.

The 8.2 percent increase approved by MRES is due to increased rail transportation rates for shipping coal to the Laramie River Station.

Alderman Jack Powell asked if the current low water levels of the Missouri River is contributing to the problem. Holoch said the city is guaranteed a certain amount of power from WAPA thanks to fixed contracts.

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